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Bioinformatics Gets IPO Fever as InforMax Files for Offering

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Bioinformatics software developer InforMax has filed an S-1 registration statement with the US Securities and Exchange Commission for an initial public offering aimed at raising $75 million, bringing to five the number of bioinformatics companies that are expected to go public in the near future.

Earlier this year, Rosetta, NetGenics, and Genomica all filed for offerings, while German bioinformatics company Lion Bioscience last week said it would go public in Germany and the United States (see "Lion Seeks to Raise Up to $189M in IPO" article).

Details about the number of shares to be sold and the issue date have not yet been determined, said InforMax CFO Joseph Lehnen. He noted however, that the official statement outlining these details would likely be published in the next five to six weeks.

In its registration statement, InforMax said it expects the proceeds from the offering along with cash reserves to cover the company’s operations for two years. As of March 2000, the company had $900,000 in cash.

Bear, Stearns is the lead underwriter for the offering, which is being co-managed by US Bancorp Piper Jaffray and Adams, Harkness & Hill.

With 1,300 customers worldwide and partners such as Compaq, Sun Microsystems, SGI, and Oracle. InforMax of Rockville, Md., is considered to have one of the most extensive customer bases in the bioinformatics sector. Johnson & Johnson, Procter & Gamble and Pfizer all use InforMax’s software.

 

The company said it intends to use the money raised in the IPO to offset the costs associated with developing and marketing new products.

In the first quarter of 2000, InforMax’s net losses widened to $2.5 million, compared with a net loss of $300,000 in the year ago period as the company expanded its workforce and made investments designed to beef up revenue growth.

The company now has 172 employees, with 84 in research and development and 45 in sales and marketing.

Selling, general, and administrative expenses rose 215 percent to $3.4 million in the first quarter.

Revenues for the first quarter surged 102 percent to $3.2 million from $1.6 million a year ago.

InforMax’s main products are GenoMax, a large-scale data mining software package, and Vector NTI, a desktop application used for sequence analysis and visualization.

InforMax derived $2.4 million in revenues from software licenses and customer support in first-quarter 2000, compared with $1 million in the year ago period. Professional services accounted for $797,116 in revenues in the first quarter, compared with $541,358 in the corresponding period in 1999.

The company said that its professional services generally consist of software development services subcontracted to the US National Institutes of Health’s National Center for Biotechnology Information.

In 1999, Informax posted a net loss of $1.3 million compared with $600,000 in 1998. Revenues for the year rose 143 percent to $10 million from $4.1 million in 1998.

The company said that North America, Europe, and Japan account for 72 percent, 20 percent, and six percent of their sales, respectively.

As of the end of March, 2000, InforMax had a total deficit of about $4.6 million. The company said it expects to continue posting net losses in the “foreseeable future.”

During first-quarter 2000, the company generated $3.2 million in cash from operations, compared with $2.5 million in the same period a year ago. Gross cash spent on operations totaled $4.6 million in the quarter, exactly double the amount spent in the year ago period.

In June, InforMax received a $3 million bridge loan from PNC Bank under the terms of a pre-existing loan agreement from May 1999.

The company also raised $3.6 million in a private placement.

InforMax said it would seek more strategic alliances in order to expand its customer base and boost its distribution channels. In addition to co-marketing its products with leading computer companies, InforMax has also made its software available through the Internet via a deal with application service provider Viaken.

The company said it would acquire and make strategic investments when and where necessary to accelerate its business.

Company CEO Alex Titomirov owns about a quarter of InforMax’s equity, making him the largest shareholder, followed by Hooks Johnston of FBR Technology Ventures, who owns about 19 percent.

—Jennifer Friedlin

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