Volatility in the US credit and equity markets forced biochip maker Fluidigm earlier this month to postpone indefinitely its plan for an initial public offering, though a re-attempt could happen sometime in 2009, according to a company official.
Fluidigm spokesperson Howard High said this week that the timing of a re-attempt is “up in the air,” and that the company will “wait for the US financial markets to settle down.”
“Between the negotiations for the financial bailout package, the pending US presidential election, and the anticipation that things are always a bit in flux during that time when a new administration is coming into the White House and the old one is leaving, we didn’t think there was going to be a good opportunity to try again before the end of the year,” High said.
Therefore, with a possible IPO not in the cards until sometime in 2009, the firm could have been constrained by SEC rules regarding discussion of its products and business opportunities for months, High said. The only choice was to withdraw its registration, he said.
“If we had postponed the registration indefinitely, we would have still had to operate under the rules and regulations of having an active registration,” said High. “Not being able to freely communicate with our customers, the press, or the public between now and the end of the year would have been troublesome.”
Additionally, High said that Fluidigm may have a “better story” to tell investors once it re-attempts an IPO. “We came so very close to successfully completing our IPO in what many have said is the most turbulent financial market in decades, possibly ever,” he said. “So with a stabilized market and a continually stronger Fluidigm story, we are confident that we will have a successfully completed IPO in our future.”
The South San Francisco, Calif.-based company initially filed for the IPO in April (see BAN 4/22/2008). Two weeks ago, it decided to postpone the offering, which was scheduled to become effective on Sept. 18 or 19, citing the “historic instability in the market.”
Fluidigm had hoped to pocket between $70.8 million and $81.9 million from the move by selling 5.3 million shares of common stock at a price of between $14 and $16 per share. It had intended the capital to fund sales and marketing initiatives, R&D activities, and facilities and manufacturing expansion.
Fluidigm intended to float on the Nasdaq market under the symbol “FLDM,” and anticipated having roughly 66.6 million shares outstanding following the IPO. Morgan Stanley would have been the book-running manager for the offering, with UBS, Leerink Swann, and Pacific Growth Equities acting as co-managers.
As of June 28, Fluidigm held $30 million in cash and cash equivalents, which High said is enough to enable the company to wait for the market to calm.
Additionally, the company continues to see demand for its two platforms: the BioMark, which is used for gene-expression analysis, genotyping, and digital PCR; and the Topaz system, which is used for protein-crystallization research.
“Not being able to freely communicate with our customers, the press, or the public between now and the end of the year would have been troublesome.”
The BioMark was launched in 2006 with accompanying 48.48 integrated fluidic cartridges, or IFCs. The company has been touting the BioMark in particular as a platform that will challenge both microarrays and PCR-based platforms, such as Applied Biosystems’ TaqMan, for market dominance.
In June, the company began offering 96-sample IFCs for use on the BioMark system. The device, which can be used for both gene expression and genotyping applications, is configured to run 96 samples against 96 primer-probe sets to generate 9,216 reactions (see BAN 5/6/2008).
“Our business is actually doing very well,” said High. “Our revenues have grown significantly — our first-half revenues roughly matched all of last year’s revenues,” he said. According to its IPO registration, Fluidigm had revenues of $7.3 million in 2007. The company has not yet publicly disclosed its earnings for the first of half of 2008.
“We have been attracting many new customers and our current customers seem to be very happy and successful using our technology,” High said. “So, for the foreseeable future, we can continue to grow our business.”
Despite the upheaval in the US financial markets, which has been going on for about a year but has taken a sharp turn for the worse in recent weeks, array vendors have so far escaped largely unscathed.
As Affymetrix President Kevin King recently told investors at UBS’ Global Life Sciences Conferences, the firm’s customers are mostly academics and researchers who base their purchases on publicly and privately available funding.
Some array firms have managed to secure capital from other sources. For example, in recent weeks, Pathwork Diagnostics, a Sunnyvale, Calif.-based test maker, secured $20 million in a second round of private-equity financing to help roll out its tissue-of-unknown-origin test on the Affymetrix platform (see BAN 9/9/2008).
Quanterix, a Cambridge, Mass.-based startup, also recently raised $15 million in private equity to develop its flagship single-molecule array platform. “I’d say the [credit and stock] markets have had relatively little effect on [the] early-stage venture market for a couple of reasons, but, most of all, venture investors are still looking for good ideas and there is still plenty of capital available,” Quanterix CEO Nick Naclerio said earlier this month (see BAN 9/9/2008).
Still, broader market conditions have created issues for some companies. CombiMatrix, for example, recently issued two statements in as many days that discussed the ability of National Union Fire Insurance Company, an American Insurance Group company, to provide the $35.7 million it has been ordered to pay CombiMatrix, after the chip vendor sued National Union over a coverage dispute. National Union has appealed the decision (see BAN 8/19/2008). AIG last week required a cash infusion from the US government.
"A number of shareholders have noted the mounting problems with various financial institutions, including AIG,” CombiMatrix CEO Amit Kumar said in a statement. "They have asked us what the consequences would be if AIG should suffer even more financial difficulties and perhaps not be in a position to pay our judgment.”
“We want to note that, while National Union is an AIG company, the obligation to pay CombiMatrix belongs to National Union. In addition, while our case winds its way through the appeals process, the currently posted bond covers payment to us regardless of the financial condition of National Union or AIG.”