Veracyte, the San Francisco-area laboratory that specializes in molecular testing for thyroid issues, has plans to go public. The company released its Afirma thyroid molecular test in early 2011. The assay is used to reduce the number of unnecessary thyroid surgeries by moving beyond fine needle aspiration biopsies—and the inconclusive results they obtain in about a quarter of the 535,000 procedures performed in the United States every year. An Afirma panel retails for $4,275. Veracyte filed an S-1 registration with the Securities and Exchange Commission (SEC) late last month, less than three months after it received $28 million in series C tranche funding from its major investors. According to the SEC documents, Veracyte will raise up to $75 million through the initial public offering and trade on Nasdaq. Of the sums raised, $40 million would be split evenly between expanding sales and marketing, with the remainder put toward debt reduction and administrative expenses. Morgan Stanley & Co. would handle the underwriting. Financial data accompany the S-1 suggests the release of the Afirma test has been a boon for Veracyte. Although the company reported a loss of $18.6 million in 2012, revenue was $11.6 million, more than quadruple the $2.6 million […]
Veracyte, the San Francisco-area laboratory that specializes in molecular testing for thyroid issues, has plans to go public.
The company released its Afirma thyroid molecular test in early 2011. The assay is used to reduce the number of unnecessary thyroid surgeries by moving beyond fine needle aspiration biopsies—and the inconclusive results they obtain in about a quarter of the 535,000 procedures performed in the United States every year. An Afirma panel retails for $4,275.
Veracyte filed an S-1 registration with the Securities and Exchange Commission (SEC) late last month, less than three months after it received $28 million in series C tranche funding from its major investors.
According to the SEC documents, Veracyte will raise up to $75 million through the initial public offering and trade on Nasdaq. Of the sums raised, $40 million would be split evenly between expanding sales and marketing, with the remainder put toward debt reduction and administrative expenses. Morgan Stanley & Co. would handle the underwriting.
Financial data accompany the S-1 suggests the release of the Afirma test has been a boon for Veracyte. Although the company reported a loss of $18.6 million in 2012, revenue was $11.6 million, more than quadruple the $2.6 million reported in 2011 (the company reported a loss that year of $14.4 million). Test volumes zoomed from 6,400 to nearly 26,000.
The company will likely rely only on sales of Afirma for the long term. “We are in various stages of research and development for other diagnostic solutions that we may offer, but there can be no assurance that we will be able to identify other diseases . . . or when we will be able to successfully commercialize these solutions,” the prospectus said.
Veracyte also did not project when it might become profitable, noting that it was expected to report net losses for the foreseeable future. It relies on Medicare for slightly more than a third of its revenue, and two major commercial insurers—UnitedHealthcare and Aetna—account for about 20 percent.
Takeaway: Veracyte, like many other Bay Area high-tech companies, will try to cash in by going public, but what level of success it achieves remains to be seen.
