British molecular diagnostics firm Osmetech last week filed with the US Securities and Exchange Commission for an initial public offering of as much as $40 million.
Osmetech also separately reported that sales for the full-year 2009 rose 81 percent, mostly on the strength of its array-based tests, while net loss narrowed 16 percent year over year.
Osmetech, which makes microarray-based molecular diagnostics, said its board approved a proposal to reorganize the firm so that it becomes a wholly owned subsidiary of Delaware-based GenMark. The IPO was filed under the name of its newly proposed parent, GenMark Diagnostics. Osmetech currently maintains operations in Pasadena, Calif.
Osmetech's board has also approved moving its shares from the AIM, on which it currently trades, to the Nasdaq Global Market, under which shareholders would receive one share of GenMark for every 230 shares of Osmetech held.
Osmetech said that it expects to raise approximately $40 million through the fundraising to develop its products, fund sales and marketing initiatives, and for general corporate purposes.
In a statement to the AIM exchange in London, Osmetech said that the decision to float its shares in the US was made for several reasons. The firm said that it has seen a steady growth in US ownership of its stock, and US shareholders now own around 57 percent of the company. Osmetech also noted that its business activities are almost entirely based in the US, and more than 95 percent of its current sales and assets are located in the US.
"The Board considers there to be a potentially larger pool of investors in the US than the UK who are more familiar with the Osmetech Group's business and have a better understanding of the US molecular diagnostics industry," the firm said in its statement. Osmetech's board also believes that there is a "general reluctance on the part of US investors to invest in UK companies of the size and profile of Osmetech unless they have a trading facility in the US," the firm said.
Christopher Gleeson, chairman of Osmetech, predicted in a statement that the firm would "benefit from its listing being in the US and amongst a more appropriate public company peer group where there is a potentially larger pool of investors who also have a better understanding of the molecular diagnostics industry." According to Osmetech, it anticipates that its shares will begin trading on the Nasdaq Global Market on May 25, 2010.
Osmetech has been commercializing products based on its eSensor technology, which can detect up to 72 distinct biomarkers in a single sample. The company's XT-8 System, which supports up to 24 test cartridges, has marketing clearance in the US, as does two of its assays: a cystic fibrosis genotyping test and a warfarin sensitivity test.
Osmetech also has developed a respiratory viral panel test and a thrombosis risk test, which are currently labeled for investigational use only, but the firm intends to seek US Food and Drug Administration clearance for those tests. It also has a pipeline of eight potential products in development or design, it said, including a Plavix (clopidogrel) sensitivity test and a KRAS mutation test (see BAN 4/7/2009).
Founded in the UK as Aromascan in 1993, the company initially sold an electronic odor sensor technology before changing its name to Osmetech in 1999 and refocusing on the healthcare market. The company founded a Critical Care Division following its 2003 purchase of Roche Diagnostics' Opti blood gas detection platform. The company divested Opti last year.
Osmetech also established an Osmetech Molecular Diagnostics division after acquiring Molecular Sensing in 2004 and Clinical Micro Sensors from Motorola in July 2005 (see BAN 8/10/2005). Most of Osmetech's tests are based on the array technology acquired with CMS, a company that current CEO Jon Faiz Kayyem founded in 1995 before it was sold to Motorola for $200 million in 2000.
As part of its reorganization, Osmetech will make some executive personnel changes. The company's current directors are Faiz Kayyem, Chairman Christopher Gleeson, incoming Chief Financial Officer Steven Kemper, Director Daryl Faulkner, and outgoing CFO David Sandilands. Once Osmetech's proposal becomes effective, the board of directors of GenMark will be Gleeson, Faiz Kayyem, Faulkner, and Kevin O'Boyle. Additionally, Kemper, John Bellano, and Pankaj Singhal will become executive officers of GenMark. Bellano currently serves as senior vice president of commercial operations, while Singhal is senior vice president of product development and manufacturing.
Osmetech last week reported that its full-year 2009 revenues increased 81 percent, while the firm cut its net loss by 16 percent.
Osmetech's total revenues for the 12 months ended Dec. 31, 2009, were £638,186 ($961,753) compared to £352,069 for FY 2008. The firm said that the increase was due to growth in sales of its cystic fibrosis genotyping test and a warfarin sensitivity test. It added that currency translation accounted for 27 percent of the revenue growth.
Osmetech's net loss for 2009 dropped to £13 million from £15.5 million.
The company said that its R&D expenses fell 33 percent to £1.8 million from £2.7 million, due primarily to completing the development of its eSensor XT-8 System in 2008. It did not provide SG&S expenses.
Osmetech finished 2009 with £10.2 million in cash and cash equivalents.