Medical diagnostics company LipoScience is reviving its plans for an initial public offering of common stock but scaling back the amount of money it hopes to raise from investors.
In documents recently filed with the Securities and Exchange Commission, the Raleigh-based company reported it anticipates selling 5 million shares of stock at between $13 and $15 per share, which would amount to between $65 million and $75 million before accounting for costs associated with the offering.
In June 2011 LipoScience notified the SEC that it wanted to raise $86.25 million in an IPO, but it never moved forward with that plan.
LipoScience is hoping to become the first Triangle company to go public since Chapel Hill-based Cempra, which raised nearly $48 million in February.
John Fitzgibbon Jr., who tracks new stock offerings for IPOScoop.com, said LipoScience is more appealing than the run-of-the-mill biotechnology company.
“They have revenue. They have net income,” he said. “This is a real company. ... Normally these biotechs come in on a wing and a prayer.”
LipoScience, which had 204 employees as of Dec. 31, generated $41.2 million in revenue over the first nine months of 2012, an increase of 24 percent from a year earlier. Net income totaled $1.1 million during that span, versus a loss of $568,000 a year earlier.
However, the company noted in its filing that “we expect to incur losses for the next several years as we increase our expenses in an effort to increase market share for the NMR LipoProfile test and to develop new diagnostic tests.”
The bulk of LipoScience’s revenue comes from the NMR LipoProfile test, which assesses patients’ risk of heart disease.
Plans to expand
Until recently, that test could only be performed by technicians at the company’s laboratory in Raleigh. But in August the company obtained Food and Drug Administration approval for its highly automated Vantera system, which is designed to be used by lab companies such as Burlington-based LabCorp and Quest Diagnostics, which have facilities nationwide.
Benefits of the Vantera system include significantly reducing the turnaround time for test results in some instances.
“We have entered into agreements with some of our current clinical diagnostic laboratory customers to place the Vantera system in their laboratories,” LipoScience stated in its filing. “We are also in discussions with additional laboratory customers who have indicated a similar interest in the placement of the Vantera system. We currently expect these placements to begin in the first quarter of 2013.”
CEO Richard O. Brajer couldn’t be reached for comment.
Among LipoScience’s major shareholder is Durham venture capital firm Pappas Ventures, which currently owns a 7.6 percent stake in the business. That stake would be reduced to 5.4 percent if the IPO succeeds.
If that happens, LipoScience plans to use the money it raises for, among other purposes, expanding its 73-person sales and marketing staff and funding research-and-development efforts.
LipoScience has been down this road before. It filed plans for an IPO in 2002 but later scrapped them. The company was founded in 1994 based on research developed at N.C. State University.
IPO market had subpar year
The IPO market was subpar in 2012, Fitzgibbon said.
A total of 145 companies raised $43.7 billion, including $16 billion raised by Facebook alone. That’s below the 10-year average of 160-170 companies going public per year, Fitzgibbon said.
He said “the Facebook fiasco” – the company’s stock tanked after it went public – dragged down the overall market last year.
Faced with last year’s lackluster IPO market, Durham drug-development company Argos Therapeutics withdrew its plans to go public in March.
CEO Jeff Abbey said Friday that withdrawing was the right decision for Argos, given that Wall Street was fixated on the company’s crucial Phase 3 trial of its experimental drug for treating kidney cancer. The company only began enrolling patients in that trial this month, and final results won’t be available for about three years.
“Public investors just aren’t willing to wait that long,” Abbey said.
Argos, which raised $25 million in venture capital after scrapping its IPO plans and anticipates raising another round of private funding this year, hasn’t given up hope of going public.
Abbey said the company will revisit the IPO question in mid-2014, when it has interim data from its Phase 3 study.
“It’s definitely an option on the table for us in 2014,” he said. “There are a lot of different factors, including market conditions” at that time.