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10x Genomics CEO Says Firm 'Ready for Growth' Following $357.5M IPO


NEW YORK – Single-cell analysis firm 10x Genomics didn't need to raise more than $357.5 million in yesterday's initial public offering.

"This is not, strictly speaking, a financing round in the sense that we needed cash to keep going," 10x CEO and Cofounder Serge Saxonov told GenomeWeb in the Nasdaq offices, following the close of the market.

The proceeds are hundreds of millions more than the $100 million the Pleasonton, California-based firm initially suggested it was looking for in its Form S-1 filed with the Securities and Exchange Commission.

But as he engaged with investors during 10x's roadshow, Saxonov said it became apparent the interest was there to allow the company to raise a lot more. After setting the share price range between $31 and $35 on Sept. 3, which would have provided approximately $271 million in proceeds, earlier this week, 10x upped the range to $36 to $38, for an expected $333 million offering. Then, yesterday, it priced its offering at $39 per share. 10x probably could have gone even higher.

Not even another lawsuit from competitor Bio-Rad Laboratories, targeting 10x's revamped Next GEM reagent line and filed on the eve of the offering, dampened investor interest. Almost immediately, the stock started trading above $50 per share. Shares of 10x closed at $52.75, after hitting a high of $57.51. The company's current market capitalization is approximately $4.9 billion. 

The response over the last few weeks from investors was "really nice validation" of the work the company has done so far, Saxonov said. "I think that's also a signal for the future because we've got a lot of work to do."

10x is "loaded and ready for growth," he said. "The financing does lay a foundation for additional investments in infrastructure, operation, R&D, and commercial...I think the space of opportunities is really, really large." The company will try to capture a $13 billion chunk of the life science tools market that Saxonov said 10x's technology addresses. That includes thousands of research labs around the world using next-generation sequencing, microarrays, and flow cytometry, among other technologies. The firm is ready to launch new products, including the Visium spatial profiling platform, based on technology obtained by its acquisition of Swedish firm Spatial Transcriptomics, and, if the details are right, 10x is ready to acquire more technologies.

Saxonov cofounded 10x Genomics in 2012 with Ben Hindson and Kevin Ness, two compatriots from QuantaLife, the firm that developed droplet digital PCR and which was acquired by Bio-Rad in 2011.

Saxonov said he purposefully scaled up the company before going public  which GenomeWeb first reported the company was thinking of doing in December 2018. As of June 30, 10x had 1,284 instrument placements and in the first half of 2019 collected revenue of $109.4 million. In fiscal year 2018, the company reported revenue of $146.3 million, up 106 percent from $71.1 million in 2017, with a net loss of $112.5 million, up from $18.8 million in 2017. 

Saxonov said the firm is looking to build on a strategy of making placements at new institutions, which he said often leads to multiple instrument purchases. "[Researchers] start using someone else's and then they want their own." Compared to the sequencing instrument market, 10x's is decentralized, he said, noting that many customers don't have their own sequencer and will instead outsource that work.

In the short term, the company's focus is on launching its Visium spatial profiling platform. The firm began taking orders last week and will ship them before the end of the year, Saxonov said. He added that the company is interested in investing in improvements to its products in response to customer demand. Enabling Visium to measure the same analytes — protein, genomic DNA, and epigenetic markers — as its other product lines "might naturally make sense on the platform," he said.

Saxonov also noted that investors and researchers aren't the only ones looking to get in on the action at 10x. BGI has developed a kit to enable sequencers to be used as a readout for samples prepared with 10x's platforms, he said. BGI did not immediately respond to request for confirmation and more details about the kit. It's likely the MGIEasy Universal Library Conversion kit, which was released earlier this year and highlighted in a preprint posted to BioRxiv in February, showing similar performance in single-cell RNA sequencing between BGI and Illumina's sequencing platforms.

Saxonov told GenomeWeb, "what ultimately motivates us is the ability to advance human health and cure diseases." However, he said the firmwas focused on the research market for now. "There's often a temptation to go into the clinic too early," he said. "There is so much opportunity in the research market and that's where the highest point of impact is, to enable new discoveries which will ultimately lead to new diagnostics and therapeutics in the future."

He also said the company is not interested in making acquisitions just for the sake of growth. 

"My orientation is toward the long term," Saxonov said. "The kinds of investors we have here are very much long-term oriented. And I think people see that this could be a really big company in the future."

How big? Saxonov said he admired the ambition to "move the world in significant ways" with technology that he saw in the early days of Google and Genentech. "But this is really important to us: to make sure we don't have an arrogant orientation," he said. "We want to stay humble."

In afternoon trading on the Nasdaq, shares of 10x Genomics were down just over 1 percent at $52.15.