LipoScience, which successfully sells one diagnostic test it created and is developing others, filed with the Securities and Exchange Commission for an initial public offering of up to $100 million in stock, Friday.
The Raleigh-based company created a patented test for measuring blood cholesterol levels using nuclear magnetic resonance (NMR). It also performs other heart disease diagnostic procedures using NMR and is developing tests for other diseases.
The timing, price, and number of shares the company plans to sell will be disclosed in future documents it files with the SEC.
Jeff Barber, managing partner of the Raleigh office of PricewaterhouseCoopers tells Local Tech Wire he isn’t surprised by the company’s filing.
“LipoScience’s revenue growth has been outstanding. Right now the market is closed to anything but a really good deal,” he says.
“I think the market is accepting IPO candidates that have the right characteristics – one is product and customer acceptance. That’s what the market is looking for, are people buying your product?”
According to documents filed with the Securities and Exchange Commission on Friday, LipoScience sold 249,000 tests last year that produced $18.5 million in revenue.
The company showed strong revenue growth for the last three-quarters, although it continues to lose money. In 2000, LipoScience reports it lost $2.97 million, down from $3.17 million in 1999. It’s total losses to date of about $8 million would not scare seasoned biotech investors, particularly in light of its prospects for continued revenue growth.
“I think they have excellent prospects,” says Barber. “Frankly, they have top quality bankers who aren’t going to do something unless they think it’s a good deal. Getting them to sign on is a tremendous sign.”
Underwriters of the LipoScience IPO include a stellar lineup of top investment houses: Merrill Lynch; US Bancorp Piper Jaffray Inc.; Thomas Weisel Partners LLC; and Pacific Growth Equities Inc.
Chris Matton, an attorney with the Raleigh office of Kilpatrick Stockton, which has many technology clients, tells Local Tech Wire, “They dipped their toes in the water and concluded it’s warm enough to dive in. The SEC approval process takes time. They shouldn’t expect to be a public company for at least 90 days, perhaps longer.
“But in essence, the moment the market heats up, they’ll be ready. They’re a strong, well-run company with growing revenues.”
The filing ends an 18-month gap in IPO activity in the region. Pozen, a Durham drug development company, launched the most recent area IPO in October 2000. No North Carolina technology companies went public last year.
LipoScience was founded in 1997 by James D. Otvos, its chief scientific officer. It changed its name from LipoMed to LipoScience this year to avoid being confused with a Swiss company of the same name. The company promoted its former vice president, F. Ronald Stanton, to chief executive officer in mid-February.
The 152-employee company says it plans to expand its operations from the Southeast to the Midwest and Northeast and will add more than 50 people to its sales force by the end of next year.
In the SEC filing, the company notes that most doctors and other health-care professionals still do not know about LipoScience’s NMR-based cholesterol test.
The company competes primarily against traditional cholesterol blood tests, a $3.5 billion market in 1998 according to its SEC filing.
