UPDATED: Natera bags $180M in IPO to ramp up R&D

Natera's San Carlos, CA, headquarters--Courtesy of Natera

Natera has been on a diagnostics roll as of late, roping in new funds to support its noninvasive prenatal test (NIPT) and to expand its reach in the liquid biopsy market. Now the company has charted another milestone, raising $180 million in an initial public offering to support its R&D work and bolster its footprint in cancer diagnostics.

The California-based company offered 10,000,000 shares of its common stock at $18.00 per share--at the high end of its expected range--and also granted underwriters a 30-day option to purchase as many as 1,500,000 additional shares of common stock to cover any overallotments, Natera said in a regulatory filing. The company plans to list on the Nasdaq under the ticker "NTRA."

Cash from an IPO helps Natera at a critical moment, as it looks to develop its NIPT technology and diversify its portfolio. The company will funnel about $59.1 million in proceeds toward working capital and general corporate purposes, and will use another $100 million "for continued investments in research and development for our core technology and development of its product offerings," according to its filing. Natera's Panorama test screens for chromosomal abnormalities including Down syndrome, Edwards syndrome and Patau syndrome, and the company bills its test as more sensitive than others on the market.

"We are going to use proceeds to lead women's health genetic testing, especially for low-risk patients," CEO Matthew Rabinowitz told FierceDiagnostics. "We're really seeing uptake of Panorama in that market. We're making a major investment in leading the low-risk genetic testing space and we're hoping that reimbursement will come pretty soon."

But Natera is also looking to other areas for growth, planning to use its technology to make a splash in the increasingly competitive liquid biopsy market. In June 2014, the company struck a deal with New York's Feinstein Institute for Medical Research to see whether its noninvasive technology could pinpoint cancer in blood and tissue samples. Earlier this year, the 2013 Fierce 15 company roped in $55 million in financing to beef up development for its cell-free DNA-based test for early detection and monitoring of cancer.

If all goes according to plan, Natera's tests will be used in about 1.1 million new cases of cancer in the U.S. each year, bringing in about $6.6 billion annually, the company said in its regulatory filing.

Looking ahead, the company also plans to leverage its cloud technology platform to expand its footprint in the industry. Natera's software allows labs across the world to run tests and access algorithms through the cloud, eliminating the need for specialized equipment or expensive facilities, Rabinowitz said. The company recently scored FDA approval to run its cloud technology in the U.S., making it a "poster child" for a new class of medical devices, he added.

"We're much more like an IT company than a traditional healthcare lab," Rabinowitz said. "Our ability to piggyback on the emergence of sequencing and enable people to run samples themselves, that creates scale very quickly without having to build infrastructure. I think that's fundamental to our positioning here and a large part of why our IPO has been so well received."

Still, Natera could face an uphill battle as it fights for its share of the prenatal diagnostics market. Archrivals such as Sequenom ($SQNM), Illumina's ($ILMN) Verinata and Roche's ($RHHBY) Ariosa are all hard at work on prenatal testing products, securing regulatory nods and striking deals to expand their industry reach. In June, Illumina said it would team up with Chinese genomics firm Annorad to develop noninvasive screening tools based on next-generation sequencing technology. The same month, Ariosa nabbed a CE mark for software for its NIPT, bolstering its presence abroad after scoring favorable coverage decisions for its products in the U.S.

- here's Natera's filing
- read the company's statement

Special Report: FierceMedicalDevices' 2013 Fierce 15 - Natera | Five companies to watch in the liquid biopsy field

Editor's Note: This story was updated with comments from Natera's CEO.

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