Oxford Immunotec's Dx milestones could supercharge IPO

Considering the number of milestones Oxford Immunotec Global has already achieved, the maker of a next-generation tuberculosis diagnostic blood test could very easily hit the high end of its targeted $13-$15 IPO price range.

The U.K.- and U.S.-based operation announced its IPO terms in a Nov. 8 regulatory filing, including plans to sell an initial 5.4 million shares. Money from the offering will help Oxford Immunotec, in part, broaden sales, marketing and customer service operations in the U.S. and around the world. The company will trade on Nasdaq under the symbol "OXFD."

This is a time when diagnostics companies in particular struggle to obtain new venture investment unless they present a relatively low risk, with products near regulatory approval or already on the market. A lack of insurance reimbursement is also a potential red flag, as is a product that does not prove it improves the standard of care and also helps reduce healthcare costs. Oxford Immunotec's prospectus does a convincing job of arguing that it has overcome most of those major obstacles since its 2002 founding.

Its T-SPOT blood diagnostic test for latent TB infection won pre-market approval in the U.S., a CE mark in Europe and regulatory approval in Japan and China. It's sold in 50 countries, the company noted, a milestone that would make many smaller diagnostics and device companies salivate. Oxford Immunotec points out in its revised S-1 filing that it has also obtained reimbursement approval in the U.S. (where it has a special code only for its test), plus key markets such as Japan, Switzerland and Germany.

Oxford Immunotec disclosed that it has a distribution agreement with Shanghai Fosun Long March Medical Science Co. Ltd., or Fosun in China (recently revised) that allows the firm to distribute Oxford Immunotec's tests in China, Macau and Hong Kong. A similar agreement is in place with Riken in Japan--a major coup in a health care market that comes close to the U.S. in terms of demand and overall size. Regulatory approval is one thing, but without a distribution plan in place, it doesn't mean much in the end.

Beyond basic selling plans, investors want to know that a company is also plotting its future. Oxford Immunotec said it sees a place for its T cell-measuring diagnostics technology well beyond tuberculosis and into other infectious diseases, cancers and autoimmune diseases. Its IPO will also help fund expanded R&D efforts.

The 151-employee operation also makes the case that it is drastically improving care and saving money in the process. As it noted in its filing, the current standard of care for tuberculosis diagnosis is a test known as the TST--something that hasn't changed in 100 years and takes up to 72 hours to complete in a complex process that involves having a patient return to the clinic for further evaluation. Oxford Immunotec said its test is more sensitive and specific, requires a basic blood draw and doesn't require a follow-up. The result, the company said, produces lower costs by increasing patient compliance and simplifying the test process. Oxford Immunotec will have to overcome marketplace competition, but the company asserted that customers to date have responded well to the product.

For now, tuberculosis is Oxford Immunotec's main growth engine. The company said it has expanded revenue from $4.3 million in 2009 to $20.7 million in 2012. As of Sept. 30, 2013, it said it has sold more than two million T-SPOT TB tests, one million of which came through in the fiscal year that ended Sept. 30. According to World Health Organization statistics cited by the company, more than 9 million people contracted active TB disease in 2011, and two billion people globally have latent tuberculosis infection.

The market potential is there, and Oxford Immunotec is clearly counting on investors betting on the fact that it has already made great strides getting its debut product to the patients who need it. We'll see what happens when Oxford triggers its IPO.

- read the amended S-1 filing
- here's FierceMedicalDevices's take

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