BG Medicine Wins FDA OK, Primes Pump for Second Shot at IPO

11/24/10Follow @xconomy

BG Medicine, the Waltham, MA-based diagnostics company, said it has received FDA clearance for its lead product in development, a new test to measure the progress of patients with chronic heart failure. This is certainly the kind of news that can’t hurt for a company that’s trying to pull off an IPO, for the second time.

The company announced that the FDA has cleared its Galectin-3 test to help doctors assess the prognosis of patients with chronic heart failure. Galectin-3 is a protein associated with progressive fibrosis, or stiffening, of the heart muscle that makes it more difficult to efficiently pump blood, the company said. The protein marker is found in about 30 percent of heart failure patients, BG said. It’s the first novel cardiac test the FDA has approved for sale in five years, the company said.

Not surprisingly, BG Medicine updated its latest investor prospectus immediately to reflect the news of its FDA approval. BG said back in January that it hoped to raise as much as $86 million through an IPO, but hasn’t yet updated its plan with details on the share price, or number of shares it plans to sell. Since filing its original prospectus in January, BG now has a new group of underwriters supporting this deal. Led by UBS, they include Lazard, Baird, and Cowen & Co. The January filing said that Jefferies & Co, UBS, Cowen & Co., and Thomas Weisel Partners were the underwriters.

While an FDA approval is always good news for a startup company, BG cautioned in its investor prospectus against expecting too much in the way of sales. The company won approval in Europe in October 2009 for a similar, manual version of the Galectin-3 test that just gained FDA clearance, and has so far generated “only a limited amount of product revenue,” according to the prospectus. The future success of the company will depend on its ability to commercialize a more automated test, the company said in its most recent filing with the Securities and Exchange Commission.

“Although our manual BGM Galectin-3 test is an important element of our commercialization strategy, we believe that automated instrument versions of our test will be required for us to achieve broad customer acceptance and clinical adoption,” BG said.

Flagship Ventures has by far the biggest stake in BG’s ability to fulfill its business ambitions and complete the IPO. Flagship has about 45 percent of BG heading into the offering, followed by Gilde Europe Food and Agribusiness Fund (14.6 percent), and General Electric Pension Trust, Legg Mason Capital Management Special Investment Trust, and Smallcap World Fund, each of which have 7.7 percent.

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