BG Medicine this week filed an amendment to the preliminary prospectus for its initial public offering, estimating that it will raise around $67 million from selling 4.75 million shares at an offering price between $13 and $15 per share.
In the amended prospectus, the company noted that it plans to apply somewhere between $35 million and $50 million of the net proceeds to the development of its BGM Galectin-3, AMIPredict, and LipidDx protein biomarker products – an indication of its ongoing efforts to transform itself from a biomarker research services provider to a developer of proprietary diagnostics.
The company filed to go public in January, saying at that time that it planned to raise roughly $86 million. This is its second attempt at an IPO. In the summer of 2007, it filed to float on the Euronext Amsterdam Exchange but withdrew the offering several months later, citing "current market conditions."
As it noted in the prospectus, BGM has historically generated revenue from "collaborative research and development agreements and biomarker discovery and analysis services agreements."
It doesn't, however, "expect to continue to receive significant revenue from these sources going forward," it said. Instead, it plans to devote "substantially all" of its resources to the development and commercialization of diagnostic product candidates and the discovery of new biomarkers.
The company's lead product candidate is its BGM Galectin-3 protein biomarker test, a prognostic test for patients diagnosed with chronic heart failure. In November, the manual version of the test received approval from the US Food and Drug Administration, and BGM is currently finalizing commercialization plans with the Laboratory Corporation of America in anticipation of having it on the market sometime before the end of the year.
BGM is also working on automated instrument versions of the test, which it believes will be required for it "to achieve broad customer acceptance and clinical adoption." The company has entered into agreements with Abbott Laboratories, Alere, and BioMérieux for the development and commercialization of the galectin-3 test on a variety of automated lab instruments and hopes to submit a 510(k) pre-market notification to the FDA by the fourth quarter of 2011, as well as have an automated version on the market in the first half of 2012.
In the nine months ended Sept. 30, BGM posted $620,000 in revenues, down 92 percent from $8.2 million over the same period the year before. This drop was primarily due to the completion of the company's work with the High-Risk Plaque Initiative – a collaboration between BGM, Merck, AstraZeneca, Philips, Takeda, and Abbott to discover and validate methods of testing for dangerous plaque in blood vessels in order to prevent heart attacks and strokes. Over the course of the initiative, BGM recognized from it $24.2 million in revenue, including $12.1 million in 2008 – 86 percent of its total revenue that year, and $6.5 million in 2009 – 76 percent of its total revenue for that year.
As of Sept. 30, the company had $2.86 million in cash and cash equivalents, an amount that it said in the prospectus would, at most, fund its current business plans through the end of January. Successful completion of the offering, it said, would allow it to meet its "anticipated cash requirements at least through 2012," by which time it expects to have an automated instrument version of the Galectin-3 test on the market.
FDA approval of the manual version of the test took roughly 20 months, with BGM making its first 510(k) submission in March 2009. Because the manual test will serve as a precedent for the automated version, though, the company said it anticipates the approval process for the second product will take "considerably less time."
BGM is just the latest in a series of proteomics companies to shift emphasis from offering biomarker development services to developing proprietary protein biomarker-based diagnostics. It's a strategy with a mixed record. Diagnostics firms Correlogic and Vermillion, for instance, both devoted significant energies to providing biomarker services for pharma and biotech companies before moving their primary focus to the development of their own biomarker-based ovarian cancer diagnostics. In the process of developing those diagnostics – Correlogic's OvaCheck and Vermillion's OVA1 – both companies have gone into bankruptcy. Correlogic, which is currently undergoing reorganization under Chapter 11, has yet to receive FDA approval for OvaCheck, and while Vermillion launched OVA1 in March, sales of the product thus far have been well below expectations (see related story, this issue).
BGM doesn't plan to get out of the services business entirely. In 2009 the company entered into a five-year Cooperative Research and Development Agreement with the National Heart, Lung, and Blood Institute and Boston University to conduct biomarker discovery work as part of the Framingham Heart Study. That project will include three studies – one looking at coronary atherosclerosis; another looking at metabolic syndrome; and one looking at new clinical cardiovascular events. In total, the three studies will utilize 1,700 case and control samples (PM 03/19/2009).
Moving forward, BGM envisions such projects less as significant revenue streams than as sources of samples and data that could aid its biomarker product-development efforts, the company indicated in its IPO prospectus. The company said it plans "to continue to use the patient samples and data generated from our existing and any new collaborations and initiatives to successfully advance the development and commercialization of our products." It noted that it has retained certain rights to multivariate biomarkers discovered as part of the FHS project.
In addition to the Galectin-3 test, BGM currently has two other products in its pipeline – AMIPredict, a multivariate biomarker-based test for atherothrombotic cardiovascular disease, and LipidDx, a protein biomarker test to aid in the treatment of lipid disorders. The company is conducting validation trials for AMIPredict that it hopes to complete in the first half of 2011. Additionally, it is investigating potential biomarkers for multiple sclerosis, anti-TNF alpha drug response, and a variety of cardiovascular and metabolic diseases.
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