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First Bioinformatics Companies Plan IPOs Amidst Biotech Stock Selloff

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NEW YORK--If all goes according to plan for three bioinformatics companies that filed S1 prospectuses with the US Securities and Exchange Commission this month, GNOM, NTGC, and RSTA will be flashing across the Nasdaq ticker by late spring.

Genomica, NetGenics, and Rosetta during the week of March 13 each announced plans to make initial public offerings of common stock. The three will be the first pure bioinformatics companies to be publicly traded.

Although SEC regulations prohibit any of the companies from commenting on their plans, the offerings were obviously timed to take advantage of what since early February had become a highly favorable climate on Wall Street for the genomics industry. Simultaneous with the companies’ filings, however, a series of incidents led investors to dump tens of billions of dollars worth of biotechnology stock. The value of BioInform’s Genomics Index, which tracks the market capitalization of 32 companies, declined more than 40 percent between March 10 and March 21.

While industry insiders and analysts attributed the massive selloff to a bungled Presidential statement about genomic data patenting that confused investors, some also said the event was an overdue market correction. One investment researcher told BioInform that even after the losses he believed many companies in the space were still overvalued.

Genomica, NetGenics, and Rosetta’s filings indicate the companies hope to raise a total of $277 million through their offerings.

Genomica, which describes itself as a "provider of software products and services that enable pharmaceutical and biotechnology researchers to accelerate the drug discovery and development process," plans to offer 6 million shares of common stock at about $16 per share. The company’s prospectus said its first product, Discovery Manager, "offers the broadest set of software tools for genomics researchers of any commercially available product." Genomica’s customers include AstraZeneca, GlaxoWellcome, Parke-Davis and the US National Cancer Institute, and it is collaborating with PE Biosystems to develop drug-discovery software products to be used with PE’s hardware.

Genomica said it intends to use net proceeds from its offering to continue development of Discovery Manager and new products; expand its sales and marketing activities; acquire complementary technologies, products, or companies; repay capital lease obligations; and for general corporate purposes.

NetGenics plans an offering of 5.5 million shares at between $11 and $13 per share. Its prospectus described the company as a provider of bioinformatics solutions that "enable life science research companies to convert massive amounts of raw data into useful information" for drug, gene therapy, and agricultural product development.

NetGenics cited Synergy, its proprietary technology platform, together with its strategic consulting and support services, as its foundation. The company noted that the top 50 life science research companies spent over $40 billion on research and development in 1998, and predicted that the estimated $2.4 billion spent annually on bioinformatics will increase. NetGenics listed clients as Abbott, American Home Products, Aventis Crop Sciences, and Pfizer.

Calling itself an "informational genomics company," Rosetta filed to raise $115 million in its initial public offering. The company defined informational genomics as the "integration of bioinformatics with genomics tools to accelerate and improve the drug discovery process." The filing noted a technology platform consisting of its Resolver enterprise software and hardware system for gene expression data analysis, FlexJet customized gene expression microarrays, and libraries of high quality gene expression data.

Rosetta did not say how many shares would be offered or the price range of the shares, but the filing said it plans to use net proceeds of the offering for continued research and development, including expanding its platform to include other data types and analysis tools.

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