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HTG Molecular Diagnostics Files for IPO of up to $60M

NEW YORK (GenomeWeb) – HTG Molecular Diagnostics has filed a prospectus for an initial public offering of its stock for up to $60 million. 

The Tucson, Ariz.-based firm has not priced its shares nor said how many shares it plans to offer. It said in its Form S-1 filed with the US Securities and Exchange Commission on Tuesday that it plans to trade its stock on the Nasdaq Global Market under the ticker symbol "HTGM." 

Leerink Partners, Canaccord Genuity, and JMP Securities are listed as the offering's underwriters.

HTG has developed a technology platform that it said can molecularly profile samples at a fraction of the size currently required by other technologies. The platform, called the HTG Edge, can analyze up to 2,500 genes from sample volumes as small as a single-micron section of tissue, or 12.5 microliters of liquid biopsies, the company said.

HTG's objective is "to establish the HTG Edge platform as a standard in molecular profiling and make this capability accessible to all molecular labs from research to the clinic," it said in its SEC document.

The HTG Edge offers workflow and performance advantages in applications such as tumor profiling, molecular diagnostic testing, and biomarker development, it added, and as new molecular targets are discovered, substantial growth opportunities exist in fields such as immuno-oncology. Citing industry reports, HTG estimated the cancer profiling market at $17.8 billion today and said it could reach $35 billion by 2018.

The firm markets seven molecular profiling panels "that address the needs of almost 40 customers" working in the translational research and biopharmaceutical space, it said. HTG's product development pipeline includes panels for translational research, drug development, and molecular diagnostics, and its strategy is to develop profiling panels for "established and emerging molecular targets for broader and disease-specific approaches.

"For our molecular diagnostic customers where the reimbursement path is critical, we expect that our planned panels will conform to approved reimbursement codes for genomic sequence procedures," it said. "We believe this will facilitate clinical customer adoption and avoid the high costs and time required to prove medical utility and seek unique reimbursement codes." 

In October, HTG and Illumina reached a deal to develop in vitro diagnostic kits for sequencing-based tests. HTG said in its Form S-1 that the deal is for up to two complete diagnostic gene expression profiling tests for use on Illumina's NGS platforms. One or both tests may be directed at breast or lung cancer, lymphoma, or melanoma tumors, and up to one test can be used for transplant, chronic obstructive pulmonary disease, or immunology/autoimmunity disorders.

After HTG has chosen the testing field for each IVD test kit, it will negotiate a development plan and regulatory approval strategy with Illumina for each test kit. Upon mutual agreement of the first development plan, HTG will pay Illumina a fixed fee in the six-figure dollar range, it said. HTG would also pay Illumina up to $1 million in the aggregate if it fulfills certain milestones related to the IVD test kits, and a single-digit percentage royalty on net sales of any IVD test kit resulting from the agreement.

Also, in April, HTG and OvaGene Oncology forged a manufacturing supply agreement for the design and development of gene expression assays for gynecologic cancers on the HTG Edge. The same month, the company entered a research deal with the University of Texas, MD Anderson Cancer Center for the validation of HTG's diffuse large B-cell lymphoma cell of origin classifier and for miRNA discovery studies in DLBCL samples.

During the first nine months of 2014, HTG posted $2 million in revenues and a net loss of $9.8 million. In full-year 2013, it recorded $2.2 million in revenues and a net loss of $11.8 million.

As of Sept. 30, the firm had $7.7 million in cash and cash equivalents and $7.8 million in working capital.

In September, HTG said in an SEC document that it planned to raise $800,000 in a private offering of stock. A month earlier, it closed on a growth capital term loan facility for up to $16 million with Silicon Valley Bank and Oxford Finance and drew $11 million of the funding at the initial closing.

HTG's management team includes President and CEO Timothy Johnson; Chief Business Officer John Lubniewski; Senior VP for R&D Patrick Roche; VP of Finance & Administration and CFO Shaun McMeans; and VP and Chief Legal Counsel Debra Gordon.

HTG is the 11th company this year in the MDx/omics tools space to either go public or file for an IPO.

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