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Cancer Genetics Plans $48.6M IPO

This article has been updated to correct information on the firm's tests.

NEW YORK (GenomeWeb News) – Cancer Genetics anticipates raising up to about $49 million in its initial public offering, the genomics-based test development company said in an amended Form S-1 filed last week with the US Securities and Exchange Commission.

The company, which filed its IPO in December, said that it plans to offer 4 million shares of its common stock at an anticipated price of between $11 and $13 per share. At the $12 midpoint figure, the offering is anticipated to bring in net proceeds of $41.9 million, or $48.6 million if the offering's underwriters exercise their over-allotment in full.

The underwriters — William Blair & Co., R.W. Baird, Needham & Co., and First Analysis Securities — have an option to purchase an aggregate of 600,000 shares to cover any over-allotment.

Cancer Genetics said that about $14 million of net proceeds will go toward expanding its business and funding current operations; $10 million will be used to hire additional sales and marketing personnel and to support increased sales and marketing activities; $9 million will be directed at repaying certain debt; $7 million is targeted for R&D work, potential regulatory submissions, commercial launch of tests, and collaborations; and $2 million will go toward its initial contribution to a joint venture with the Mayo Foundation for Medical Education and Research to develop oncology diagnostic services and tests using next-generation sequencing.

Cancer Genetics plans to trade under ticker symbol "CGIX" on the Nasdaq Global Market.

Headquartered in Rutherford, NJ, Cancer Genetics calls itself an early-stage diagnostics shop developing and commercializing genomics tests and services "to improve and personalize the diagnosis, prognosis, and response to treatment (theranosis) of cancer," it said in its preliminary prospectus. Among the cancers targeted by its tests and services, which are offered by Cancer Genetics' 17,936-square-foot CLIA laboratory, are hematological, urogenital, and HPV-associated cancers.

In November 2010, it received CLIA accreditation for and commercially launched MatBA-CLL, a microarray-based test for chronic lymphocytic leukemia. This past January, it received CLIA accreditation for MatBA-SLL, a risk stratification test for small lymphocytic lymphoma.

The MatBA technology uses comparative genomic hybridization, or CGH, to detect chromosomal gains and losses that are often observed in mature B-cell neoplasms, according to Cancer Genetics' website.

It has not submitted to the US Food and Drug Administration for 510(k) clearance for either assay and would need additional validation before doing so, it said.

The company added that it is validating its MatBA microarray technology for other lymphoma subtypes, including mantle-cell lymphoma, follicular lymphoma, and diffuse large B cell lymphoma.

Cancer Genetics also is developing another microarray technology called UroGenRA which detects genomic changes in more than 100 regions of the human genome. It is using the technology to develop tests aimed at diagnosing, prognosticating, and predicting response to treatments for urogenital cancers, such as kidney, prostate, and bladder cancers. Another microarray test, called UGenRA, is being developed for endometrial, ovarian, and cervical cancers.

It is collaborating with Memorial Sloan-Kettering Cancer Center to clinically validate UroGenRA for kidney and prostate cancers, it said.

The firm added in its SEC document that it entered into a collaboration this month with the Cleveland Clinic to develop a diagnostic test for renal cell carcinoma focused on validating genomic biomarkers. In connection with the agreement, Cleveland Clinic is providing more than 200 clinical specimens as well as data for the validation of the UroGenRA Renal microarray.

Cancer Genetics' microarrays are optimized for use on Agilent Technologies' platforms, and Agilent manufactures the microarrays for Cancer Genetics, it said in the filing.

Additional tests in Cancer Genetics' pipeline include the LeukA microarray, FReCaD Renal Cancer Test, and FHACT HPV-associated cancer test.

LeukA is a CGH microarray for detecting gains and losses in DNA associated with the differential diagnosis and prognosis of the main types and subtypes of leukemia. FReCaD uses fluorescent in situ hybridization to differentially diagnose the four main subtypes of renal cortical neoplasms, and FHACT uses FISH technology to identify chromosomal changes in HPV-associated cancers.

Among the companies whose tests it will compete against, Cancer Genetics lists Roche Molecular Systems, Qiagen, Myriad Genetics, Genomic Health, and many others.

In addition to genetic tests, the company offers laboratory services including proprietary oncology testing; esoteric oncology testing; and clinical trial services, and competitors in the service space include Novartis' Genoptix, GE Healthcare's Clarient, Laboratory Corporation of America's Genyzme Genetics, and Bio-Reference Laboratories, it said.

In 2011, Cancer Genetics recorded $3 million in revenues, up 20 percent from $2.5 million in 2010, while its net loss more than doubled to $19.9 million last year from $8.4 million in 2010.

During the first quarter of 2012, its revenues rose 1 percent to $835,000 from $825,000 in the year-ago period, while its net loss improved to $1.1 million from $9.1 million.

Since its founding in April 1999 through March 31, 2012, the company has accumulated a net loss of $43.3 million. As of the end of the first quarter 2012, it had cash and cash equivalents of $2 million.

Panna Sharma serves as Cancer Genetics' CEO, and Raju Chaganti is its chairman. Other executives include CFO Elizabeth Czerepak and Vice President of R&D Jane Houldsworth.

As of March 31, the company had 48 full-time and four part-time employees.

If Cancer Genetics completes its IPO, it would be the first by a company in the life science tools space in more than a year. Fluidigm went public in February 2011, raising around $75 million.