CardioDx's proposed $86.2M IPO will aid marketing and insurance coverage efforts

CardioDx has a game-changing technology: a groundbreaking gene expression test designed to help rule out obstructive coronary artery disease. But the company is aggressively trying to grow its market share in an era in which diagnostics companies increasingly struggle to obtain reimbursement for their cutting-edge products.

That reality makes the California company's recently filed plans for an IPO worth as much as $86.2 million a huge deal. The money will buy the 2012 Fierce 15 winner time so executives can grow market share and find more insurers to cover the test.

CardioDx explained in its S-1 filing that the company will use the money to accomplish this, in part, by boosting its sales and marketing infrastructure substantially. (More research and development will also be part of the mix.) But without additional insurers on board, that could be a struggle. Both tasks must be accomplished for CardioDx's commercialization to be successful and end the flow of red ink since its 2003 founding and the years of discovery and development work that followed.

"As part of our commercialization strategy, we intend to continue to expand our sales presence and increase our marketing expense as we seek greater market awareness and clinician adoption of Corus CAD and broader payer coverage and reimbursement," the company explained in its regulatory filing.

CardioDx said it generated more than $2.4 million in revenue and lost more than $25.6 million in 2012, versus $1.5 million in revenue and a $25.9 million loss in 2011. And almost all of that revenue came from reimbursement issued by third-party payers including Medicare and private insurers. Those numbers reflect an upward revenue trajectory, and CardioDx has made progress in expanding its reimbursement options up until now. Medicare granted Part B coverage in Aug. 2012, for example. But more would be better. As the company noted in its filing, it has never made money, and has an accumulated deficit of $165.9 million. As of June 30, 2013, CardioDx said it had $46.8 million in cash and equivalents on hand.

Still, CardioDx has excellent timing. Corus CAD launched in 2009, but CardioDx is ramping up commercialization as the Affordable Care Act becomes fully operational. The company frames its test as being able to take advantage of the healthcare reform law because the test helps to control cost and boost efficiency of care by better identifying patients who need or don't need treatment for obstructive coronary artery disease.

CardioDx's regulatory filing doesn't disclose how many shares it will offer or the proposed share price. But it will trade on Nasdaq under the symbol "CDX."

- here's the S-1
- check out FierceMedicalDevices' take

Special Report: 2012 Fierce 15 - CardioDx

Editor's note: This story has been updated in the lead to correctly describe CardioDx's gene expression test designed to help rule out obstructive coronary artery disease.

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