Foundation Medicine has bought a ticket to ride the IPO train. The Cambridge, MA-based company, which provides genomic tests for cancer patients and drug researchers, has proposed an $86.3 million initial public offering. There have been nearly 30 maiden public offerings in biotech, and the company follows several cancer-focused startups that have completed successful deals.
Foundation operates on the cutting edge of personalized cancer treatment, but sometimes being way ahead of the curve comes with costs. As the company's filing on Monday states, the company has not yet begun to seek reimbursement for its clinical FoundationOne tests for cancer patients on Medicare. And the company indicated some uncertainties about gaining reimbursement for the test in the SEC filing for the public debut.
In fact, the venture-backed company has made most of its money from a growing list of drug developers that use its testing services to advance targeted treatments against tumors. There are 18 biopharma companies on Foundation's list of research partners, including industry giants such as Johnson & Johnson ($JNJ), Novartis ($NVS) and Sanofi ($SNY). In 2012 the company scored $8 million of its $10.6 million in revenue from biotech and pharma groups, compared with $2.6 million from FoundationOne sales.
The company, a 2012 Fierce 15 winner, is growing rapidly this year. It pulled in revenue of $5.2 million and a net loss of $7.3 million in the first quarter of 2013 compared with revenue of $612,000 and a $5.4 million net loss in the same three-month period a year earlier. The surge in revenue follows the June 2012 launch of FoundationOne, a next-generation sequencing test that assesses 236 cancer-related genes in cancer patients, helping to match them with appropriate treatments.
More than 1,500 doctors have ordered the test since its market debut, the company said. And Foundation boasts a lineup of big-named investors such as Microsoft ($MSFT) Chairman Bill Gates, Google Ventures, Kleiner Perkins Caufield & Byers and founding backer Third Rock Ventures. Foundation, formed in 2009, could be the third company from Third Rock to pull off an IPO this year after the Boston-based venture firm's portfolio companies bluebird bio ($BLUE) and Agios Pharmaceuticals ($AGIO) both went public within the last several weeks. (Agios CEO David Schenkein is also on the board of Foundation, which lists Agios among its biopharma partners.)
If Foundation can overcome reimbursement hurdles, the company could become a major player in the global diagnostics market. Yet the SEC filing indicates that so far the company owes most of its commercial success to biopharma companies.
Special Report: Foundation Medicine – 2012 Fierce 15