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NIPT Firm Ariosa Diagnostics Files for IPO

NEW YORK (GenomeWeb News) – Ariosa Diagnostics has filed a regulatory document with the US Securities and Exchange Commission for an initial public offering.

In its preliminary prospectus filed with the SEC on Monday, the San Jose, Calif.-based developer of non-invasive prenatal tests said it intends to offer $69 million in a proposed maximum aggregate offering price. It has not priced its shares yet or said how many share it plans to offer.

Ariosa said that it plans to list its shares on the Nasdaq Global Market under ticker symbol "AROS."

JP Morgan and Citigroup Global Markets are acting as joint book-running managers on the planned IPO. William Blair and Leerink Swann are also named as underwriters.

Formed in 2008 as Tandem Technologies, the company changed its name to Aria Diagnostics before changing it again to Ariosa in 2012. Its lead product is the Harmony Prenatal Test, launched in early 2012 and performed out of Ariosa's CLIA-certified laboratory. The company has a non-exclusive agreement with the Laboratory Corporation of America to offer Harmony in the US and Canada.

Ariosa operates in one of the fastest growing markets in the next-generation sequencing space, and according to a recent report from market research firm DeciBio, the majority of the $100 million worldwide NGS molecular diagnostic market in 2012 consisted of non-invasive prenatal testing. By 2015, the report said, the NIPT market will grow to around $600 million, or about half of the estimated total NGS molecular diagnostic market, as Clinical Sequencing News reported.

Ariosa's competitors in the NIPT space include Sequenom, Natera, and Illumina's Verinata Health. Quest Diagnostics, Berry Genomics, BGI, and LifeCodexx also offer NIPTs.

In addition to being highly competitive, the NIPT space has been highly litigious. In 2011, Ariosa sued Sequenom saying it was overly aggressive in its enforcement of a broad patent related to the use of circulating cell-free DNA in maternal plasma to diagnose fetal aneuploidies. In early 2012 Sequenom returned volley and sued Ariosa, alleging patent infringement. Later that year, Verinata and Stanford University also took Ariosa to court accusing it of patent infringement.

Ariosa's filing for an IPO follows a federal court's ruling in late October that invalidated US Patent No. 6,258,540, which underlies Sequenom's MaterniT21 Plus NIPT, a ruling that was viewed as a victory, at least temporarily, for Sequenom's competitors.

Sequenom has appealed the decision to the United States Court of Appeals for the Federal Circuit. At the time of the ruling, though, Ariosa called it a "complete victory" that "validates the company's long-standing view that it has freedom to develop new, innovative, and market-leading technologies to provide improved genetic testing for pregnant women."

Ariosa's Harmony is a blood-based test that evaluates cell-free DNA from the fetus found in maternal circulation to asses the risk of fetal aneuploidies, including trisomy 21,18, and 13. Since Harmony's launch, Ariosa has tested more than 185,000 pregnant women through the end of 2013, including more than 45,000 in the Q4 2013, it said in its Form S-1.

In its SEC document, Ariosa said that it believes Harmony "represents the next generation of NIPT, as it was developed to be a first-line test for the general pregnancy population," as opposed to the high-risk pregnancy population that some of its competitors target with their tests.

"By combining proprietary methods for targeted sequence analysis, bioinformatics analysis and an automated high-throughput laboratory process, we are able to provide highly accurate results at affordable prices," the company said. "Compared to traditional first-line screening options, such as serum protein measurement, Harmony can be used any time after 10 weeks into pregnancy with higher detection and lower false positive rates for Down syndrome and can provide information on fetal sex."

Harmony is available in more than 90 countries, and in 2012, Ariosa recorded revenues of $12 million and a net loss of $21.9 million. In 2013, revenues increased to $53.3 million, while net loss shrank to $2.4 million.

It had $14.1 million in cash and cash equivalents and 140 employees as of the end of 2013.

Key members of its management team include CEO Kenneth Song; President and COO David Mullarkey; CFO Daniel Puckett; Chief Medical Officer Thomas Musci; and Chief Scientific Officer Arnold Oliphant.

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