Shares of software developer Genomica have been flat since the company’s initial public offering on the Nasdaq a little over one week ago. But never mind the lackluster performance, the success of the IPO speaks legions about the robust financing environment that will likely help bioinformatics companies grow and develop their product offerings.
Genomica’s IPO, which raised $122 million, was the second largest in the bioinformatics sector following Lion Bioscience’s killer offering in which the German company recently raised $181 million on the Nasdaq. Coming in second is pretty good considering that the company only had $800,000 in revenues in 1999.
“If you think about it, remember that genomics is an information business,” said Edward Tenthoff, an analyst at Robertson Stephens, referring to the growing investor interest in bioinformatics companies. “Biotechnology companies have to manage and exploit large amounts of data to rapidly develop drug targets.”
Genomica was the fifth bioinformatics company to raise money in US markets this year.
With a cash balance of $125 million following the share flotation, Teresa Ayers, Genomica’s CEO, said the company is now well positioned to develop new and better products and to generate increased sales of its Discovery Manager suite of tools that are designed to allow users to store and analyze genomic data.
Ayers said the company would spend about $3 million on various office needs, $6 million to finish converting its software to the Java/Oracle platform, and $9 million to double the sales force from six to 12 and eventually to 15 people.
The large remainder of cash would go toward unspecified “general purposes,” including the possible acquisition of products and/or companies that would help to broaden the company’s range of visualization tools and scientific capabilities, Ayers said.
The success of the IPO tops off a great few months for the Boulder, Colo.-based genomics company, which currently employs 85 people.
Back in September, Genomica announced a deal with Applied Biosystems in which the leading genomics instrument maker invested $3 million in Genomica in exchange for 1.5 percent of its post-IPO equity. Under the terms of that deal, Applied Biosystems also received a non-exclusive license to incorporate Genomica’s object model for storing phenotypic and genotypic information in its systems.
And, Applied Biosystems also agreed to become the exclusive distributor of Genomica’s LinkMapper software, a tool that enables allele-calling as well as genetic data management and analysis capabilities in one integrated system. The software is compatible with Applied Biosystems’ 377 and 3100 series genotyping systems.
“Applied Biosystems has a problem in that the data generated by their genotyping equipment is not stored in one area,” Ayers said. “They want to provide their customers with a common solution.”
Robert Jones, vice president and general manager of Applied Biosystems’ informatics division, said Applied Biosystems opted to form a partnership with Genomica in order to secure access to their novel products.
“Genomica is the only commercial entity that is focused on genetics,” Jones said. “They’ve been focused on doing linkage studies, association studies, linking the phenotypes to the genotypes to the genetic map. The other folks have been focused more on sequence analysis.”
Although Genomica will no longer market LinkMapper as a result of the deal, Ayers said that sales of the product would likely increase since Applied Biosystems’ has a much bigger sales force than Genomica. Applied Biosystems’ 300-person sales team will begin selling LinkMapper in October.
According to the terms of the deal, Genomica will receive 60 percent of every sale Applied Biosystems makes of LinkMapper, which goes for $15,000, and Applied Biosystems will receive the remaining 40 percent. The deal is subject to Applied Biosystems meeting certain sales targets.
Ayers said Genomica would also create additional software products tailor-made to go with Applied Bioystems’ instruments.
“We are collaborating with Applied Biosystems to co-design products that meet their needs,” Ayers said.
Ayers noted that Genomica was also planning to ramp up sales of its Discovery Manager suite of products and to develop new gene expression and proteomics software.
Ayers declined to disclose details about the features the new software tools would include, but noted that the company might make acquisitions that would enhance future product offerings.
InforMax Surges in Post-IPO Trading
Straight on the heels of Genomica’s initial public offering, InforMax of Rockville, Md., also hit it big, raising $80 million on the Nasdaq last week. And unlike Genomica, which has not seen much movement in its stock price since the offering, InforMax’s share has risen about 30 percent.
Winton Gibbons, a genomics analyst at William Blair, attributed the discrepancy to InforMax’s bigger revenue base and reputation as a more established company. “Genomica has a particular niche and great software but it’s a less proven company at this point whereas InforMax has a larger installed base. I think that accounted for the difference especially in this somewhat sloppy genomics market,” Gibbons said.
InforMax posted revenues of $10 million in 1999, compared with Genomica’s $800,000 in revenues.
Gibbons added that Genomica’s software is seen as more genetics oriented and aimed at medical geneticists whereas InforMax is more of a suite of genomics products directed at gene identification and restriction enzyme sites. The company’s product line consists of its Vector NTI desktop suite and GenoMax enterprise platform for networks of linked computers. This software is used to analyze and interpret genomic, proteomic, and other biomolecular data.
Amersham Pharmacia Biotech recently invested $10 million in InforMax and also announced a 20-year strategic partnership to enhance GenoMax. That arrangement is InforMax’s largest collaboration.