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Fluidigm Public Offering Provides Cash Reserve as it Seeks Potential Acquisition in Reagent Space

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Fluidigm's public offering of more than 4 million shares of stock, which this week netted the company $56.1 million in proceeds, is intended primarily to fund an acquisition that would quickly bolster the company's assay and reagent offering, a company spokesperson said this week.

However, after several months of searching, the company has yet to find an acquisition target that satisfies its criteria. As such, while Fluidigm is still open to buying a firm with complementary assay technology, it may eventually instead use its recent cash influx to further build out its assay development expertise organically, the spokesperson said.

Fluidigm last week announced a public offering of 3,660,000 shares of its common stock with the intent of raising $48.7 million, pursuant to a shelf registration that the company filed with the US Securities and Exchange Commission in April to offer on occasion up to $100 million in securities.

This week, the company said that it closed the offering having sold 4,209,000 shares of common stock to raise $56.1 million.

In a statement, the company noted that it would use the funds for R&D, commercialization efforts, working capital, and other general corporate purposes.

Elaborating on that this week, Howard High, investor relations and press officer at Fluidigm, told PCR Insider that the primary motivation for the recent public offering was to give the company a war chest with which to further bolster its assay and reagent offerings via acquisition or organic growth.

High noted that the company's previous cash on hand — about $38.9 million in cash, cash equivalents, and short-term investments as of the quarter ended June 30 — was "more than adequate" to fund its core business plan of growing sales of its instrument platforms for gene expression profiling, single-cell genomics, and targeted resequencing applications.

"We didn't have a burning need for the money right now … but one of the reasons [for the public offering] was that we had also actively been looking at a potential acquisition," High said. "We had indicated that there was an opportunity to rapidly expand our offerings in terms of assays and reagents."

However, High added that Fluidigm has been "looking pretty actively, but just haven't found a fit for us. So one of the things that the exercising of the shares allows us to do is, if we decide that there just isn't something that is going to fit our criteria, we will have the flexibility and money to move forward and just build our own — expand our employment base, and find expertise in the area of reagents and assays, and then just build more capability internally."

Fluidigm, which has built its business on instrumentation systems using its integrated fluidic circuit technology to increase the throughput and reduce the cost of genomics research, went public in February 2011.

Shortly thereafter, the company launched its first assay kits and primers — Deltagene assays for gene expression, SNPtype assays for SNP genotyping, and Access Array target-specific primers for next-generation sequencing target enrichment — in a bid to offer its customers a more complete solution for gene expression, genotyping, and targeted resequencing; to help drive instrument sales; and to generate a consistent consumables-based revenue stream for its existing installed base (PCR Insider, 5/12/2011).

Fluidigm has noted that the new assays have contributed to its revenue growth since that time, although it has yet to quantify the contribution in great detail. Nevertheless, the company apparently feels the need to further cultivate this part of its business, but currently doesn't have the resources to do so as rapidly as it would like.

"We've been growing that [assay business] pretty rapidly, but it's from a very small base," High said. "If we look at the expertise that Fuidigm has built up over the year … we do not have a lot of in-house expertise [with assays]. Being able to find people that have that kind of experience, and that skill set — that is where an acquisition of the right nature and size would actually allow you to bring a significant amount of expertise in right away. But if you can't find something that meets the criteria, you can either build it yourself or walk away."

High said that Fluidigm has established fairly stringent criteria for a potential acquisition, which has made it difficult to identify a target.

"We wanted it to work within our workflow … all related around the PCR space … but we also … didn't really want it to derail our march toward profitability," High said. "Some of the assay companies are quite small, so we would need to probably do several of those types of acquisitions to make a difference. As a small and newly public company, our desire was to make sure that if we were going to do an acquisition and bring a new entity in, it was going to take a fair amount of energy and focus in order to be successful at it."

Further, High noted, Fluidigm wanted to be sure that an acquisition "enhanced our offerings as opposed to going off in a completely different direction;" and that "it's something that's going to be additive to our company" and not just an acquisition target that was "really looking for a cash out."

High said that Fluidigm will look to build its assay expertise in the areas in which it already plays: gene expression, genotyping, and primer sets for AccessArray for NGS applications. "Right now we don't make a [PCR] master mix; that could be an additive area," he added.

The company has not put a specific time limit on its attempt to make an acquisition, and High said that it will be a "gut feeling" as to when the company feels it should focus on building this part of its business organically.

Interestingly, some industry insiders have in recent months speculated that Fluidigm has ripened into an acquisition target, as opposed to a potential acquirer. For instance, in May, Los Angeles-based market research and consulting firm DeciBio released a report that projected 27 percent annual product revenue growth for Fluidigm over the next four years, making the company "an interesting acquisition target" for larger firms seeking to bolster their position in the genomics space (PCR Insider, 5/31/2012).

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