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Forget About a Second Genomics Bubble: Complete Genomics Tumbles on IPO First Day

Xconomy San Francisco — 

Super-fast, super-cheap DNA sequencing technologies have made big news in biotech the last couple years. But the early returns have made it clear that investors haven’t gone ga-ga for genomics like they did a decade ago.

The latest data point arrived today in the form of Complete Genomics (NASDAQ: GNOM). This Mountain View, CA-based company, which aspires to lead the way in the quest to sequence entire human genomes for as little as $1,000, got a ho-hum reception from IPO investors this week. The company pared back its forecasted price from a range of $12 to $14, ultimately settling for an initial price of $9 per share. And in its first day of trading as a public company—on an overall down day for the markets—Complete Genomics stock fell 11 percent, closing at $8.03.

The deal still provides Complete Genomics with a much-needed shot of $54 million in fresh capital, which it plans to use to pitch its commercial sequencing service to researchers. But the company was originally hoping to raise as much as $86 million, so Complete Genomics is going to have to pursue this market on a leaner budget.

One of Complete Genomics’ archrivals—Menlo Park, CA-based Pacific Biosciences (NASDAQ: PACB) has also seen some wind come out of its sails. PacBio broke out with a $200 million IPO late last month, commanding a hefty $800 million market valuation at an initial price of $16 a share. Investors initially bid up PacBio’s shares to as high as $17.47, but the stock has since been on a downward slide, closing today at $12.51.

It’s nothing like the hype-driven period of 2000, in which first-generation genomics companies like Human Genome Sciences, Celera Genomics, Incyte, and Millennium saw their stocks enter triple-digit territory on notions that the genome would lead to new cures and personalized medicine, right around the corner. It didn’t happen, and for a nice little retrospective, check out this piece from Nature last March.

This will be a fascinating story to watch over the coming months and years, to see whether PacBio and Complete Genomics, as well as established players like San Diego-based Illumina (NASDAQ: ILMN) and Carlsbad, CA-based Life Technologies (NASDAQ: LIFE), will truly make gene sequencing so cheap and convenient that it’s really accessible to the average biologist and changes the way they think about running experiments. But it now looks clear that the two intriguing new entrants into the market will have to tap into this emerging arena without the luxury of being able to raise more cash at the snap of a finger.