10x Genomics' IPO rockets past a $390M raise

Nasdaq
In its first day of trading, 10x Genomics’ initial share price of $39 jumped as high as 48% to $57.80 before settling at $52.75 by the close and giving the company a market cap just shy of $5 billion. (Nasdaq)

When asked about the company’s plans for the year ahead—following a splashy debut on the Nasdaq that raised $390 million outright and accelerated over the day—10x Genomics co-founder and CEO Serge Saxonov said, “I tend to think more in terms of decades.”

The overarching measure of success for the lab equipment manufacturer, a 2018 FierceMedTech Fierce 15 winner, is not the dollar amount pulled down in an IPO—or even the awards—but instead the discoveries made by researchers using its hardware.

“Those are numbers that we like to see,” Saxonov said in an interview. “We're in excess of 500 now—but it's not just the number, it's how big the findings are that people are seeing.”

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10x Genomics’ sequencers allow users to observe gene expression on a cell-by-cell basis, producing a much higher resolution picture of biological processes than previous methods. According to a company spokesperson, its products are being used by 93 of the top 100 global research institutions as well as 13 of the top 15 international pharmaceutical companies.

In one example, researchers from the Broad Institute and the Massachusetts General Hospital were able to discover a new, rare cell in a person’s airways that plays a key role in cystic fibrosis. Though only about 1% of the total tissue population, the cells were strong expressors of the mutated gene linked to the lung disease, offering a new route for potential treatments.

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“We need to understand biology much better than we actually do,” said Saxonov. “Once we do all kinds of amazing things are going to become possible.”

In its first day of trading, 10x Genomics’ initial share price of $39 jumped as high as 48% to $57.80 before settling at $52.75 by the close. The overall 35% increase delivered the company a market cap just shy of $5 billion—all told, the company reached heights much further than the $100 million figure put forward in a filing late last month.

Based on that success, it’s hard to gauge the impact of a new lawsuit from Bio-Rad Laboratories claiming patent infringement, filed the day before the IPO. It is the company’s third patent claim against 10x Genomics and covers methods for detecting enzyme reactions in small, microfluidic droplets. In an updated prospectus, 10x said it believes the patent is invalid and not infringed and that the company intends to defend itself.

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With the IPO’s proceeds, 10x Genomics plans to scale up its operations with investments in commercialization and R&D, according to Saxonov, who described the offering as a steppingstone in the company’s journey.

“Our goal is to build a very large company,” he said. “We don’t need it as a financing event. It's more of an acknowledgement and validation event.”

And business has been booming: In 2018, the company brought in $146.3 million in revenue, more than doubling the year before, and increased its installed base by more than 1,000 instruments. The rise continued through the first half of 2019, with $109.4 million in revenue.

But that sentiment—that an IPO’s story is about more than the money—was echoed by Venrock partner Bryan Roberts, who has served on 10x Genomics’ board since investing in the company in 2013.

“One of the super-important parts of an IPO, and I think that was accomplished here, is maturing the shareholder base,” Roberts told FierceMedTech. “We had a terrific set of very long-term oriented, public investors who decided they wanted to—and we were happy to allow them—to invest in the business.”

“And those relationships aren't ones that you turn on and off with a light switch. The company needs to gain credibility with them and perform over time,” he said. Goldman Sachs, J.P. Morgan Securities and BofA Merrill Lynch served as joint lead book-running managers while Cowen acted as lead manager for the offering.

2018 also saw the company’s first two acquisitions: the epigenetics-focused Epinomics as well as the startup Spatial Transcriptomics, whose tech will help underpin 10x Genomics’ upcoming Visium product line, which aims to precisely map out gene expression across different physical areas of a tissue sample by combining microscopy imaging and RNA sequencing.

“We're not doing acquisitions to get more revenue or add more scale—we have the scale now,” Saxonov said. “It's really about the technology, and making sure we're getting the right pieces into the company.”

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