Veracyte, Thyroid Cancer Diagnostic Player, Pulls Off IPO
Maybe this biotech IPO boom isn’t just for drug companies after all.
South San Francisco-based Veracyte said today it has completed its initial public offering by selling 5 million shares at $13 apiece, raising a total of $65 million. The company’s underwriters have a 30-day option to buy another 750,000 shares, which would increase the final fundraising tally. The new company started trading today at (NASDAQ: VCYT). Morgan Stanley and Leerink Swann are joint book-running managers for the offering, and William Blair and Cowen & Co. are co-managers.
Most of the more than 40 life sciences IPOs this year have been for therapeutics companies, with Cambridge, MA-based Foundation Medicine (NASDAQ: FMI) being one high-profile exception for diagnostics. Veracyte, led by CEO Bonnie Anderson (pictured above), is another rare case of a new diagnostic company that appealed to public investors. Many investors fear that insurers will never pay premium prices for molecular diagnostics to make them profitable. Veracyte, which offers a molecular test to tell doctors whether a thyroid lump is cancerous, has worked for years to prove that its test is worth the money for health insurers, by cutting down on unnecessary treatment. The company’s Afirma test has a list price of $4,275, and the company has said in its regulatory filings that “reimbursement rates vary by payer.” This year, UnitedHealthcare, Aetna, and Humana have issued positive coverage decisions in its favor.
The company generated $9.5 million in revenue in the first six months of the year, and reported a $13.4 million net loss in the period, according to its prospectus.
Domain Associates, Kleiner Perkins Caufield & Byers, TPG Biotechnology, and Versant Ventures are the largest investors in the company, according to its IPO prospectus.