|Ariosa's Harmony prenatal test--Courtesy of Ariosa Diagnostics|
Ariosa Diagnostics is headed to market with terms for a previously announced IPO. The company plans to raise $60 million to support development of its Harmony prenatal genetic test, a smaller amount than initially expected.
The San Jose, CA-based company originally filed plans for an IPO in December and announced in March that it would raise $69 million in financing. Ariosa now plans to offer 3.5 million shares at a price range of $16 to $18 and will trade on the Nasdaq under the symbol "AROS." At the midpoint of the proposed range, the company would command a fully diluted market value of $323 million, according to its amended S-1 filing. J.P. Morgan and Citi are joint book runners on the deal.
Ariosa will use the funds to expand the reach of its Harmony prenatal genetic test, a noninvasive diagnostic that identifies Down syndrome and other fetal chromosome abnormalities that is offered in more than 90 countries. The company launched Harmony in 2012 and has since tested over 225,000 pregnant women, including 50,000 women in the last quarter, according to the amended filing. Ariosa reported $53.3 million in revenue for 2013.
A successful IPO could help the company establish a stronger foothold in a fiercely competitive market. Diagnostics outfits Sequenom ($SQNM), Natera, and Illumina's ($ILMN) Verinata Health offer their own prenatal genetic tests, and Ariosa is working hard to distinguish itself from its rivals. The company won a major patent court battle against archrival Sequenom in 2013 and has since launched an aggressive marketing push for its prenatal diagnostic test.
The company touted results from two clinical studies in December showing that Harmony worked well in assessing the risk of Down syndrome in twin pregnancies. In November, Ariosa scored a major Dx deal--along with competitors Sequenom, Natera, and Verinata Health--to provide diagnostic testing to California women through the state's prenatal screening program. Earlier this year, the company won New York certification to begin marketing its Harmony test to providers.
Ariosa also has its eye on emerging markets as a potential source of revenue. The company partnered with Fleury Medicina e Saúde (Fleury Group) in 2013 to offer its Harmony prenatal test in Brazil--a country with an annual birth rate close to 3 million. Ariosa has pursued similar deals domestically, partnering with LabCorp to expand the use of Harmony to more than 1,000 facilities nationwide.