10x Genomics, a developer of integrated solutions including instruments, consumables and software for analyzing biological systems at previously inaccessible resolution and scale, has disclosed plans to raise $100 million through an initial public offering, according to a registration statement filed with the U.S. Securities and Exchange Commission.

10x Genomics has yet to spell out how much in net proceeds it expected to generate—which would depend on how much money the company agrees to raise in the IPO—or how much it would set aside toward the purposes outlined in its S-1 registration statement, filed late yesterday.

“We intend to use the net proceeds from this offering for general corporate purposes, including working capital, operating expenses and capital expenditures,” 10x Genomics stated in its preliminary prospectus. “Additionally, we may use a portion of the net proceeds we receive from this offering to acquire businesses, products or technologies. However, we do not have agreements or commitments for any material acquisitions at this time.”

10x Genomics acquired two companies last year. It bought epigenetics company Epinomics in August 2018, and two months later purchased Spatial Transcriptomics, a provider of spatial genomics technology designed to allow RNA sequencing to perform in 2D.

Headquartered in Pleasanton, CA, 10x Genomics markets the Chromium platform designed to enable high-throughput analysis of individual biological components, such as up to millions of single cells. Later this year, the company plans to launch its recently announced Visium Spatial Gene Expression Solution, designed to allow for investigation of spatially resolved whole transcriptome mRNA expression, while capturing histological information in the same tissue section.

The company has also developed molecular assays for Chromium and Visium that are intended to provide sensitive and robust biochemistries that convert minute amounts of biological analytes into detectable signals, as well as software for both platforms.

$13B Share of Research Tools Market

“We expect that 10x will power a ‘Century of Biology,’ in which many of humanity’s most pressing health challenges will be solved by precision diagnostics, targeted therapies and cures to currently intractable diseases,” 10x Genomics declared in the S-1 filing. “Based on the capabilities of our current solutions, and focusing solely on cases where our current solutions offer alternative or complementary approaches to existing tools, we believe, based on our internal estimates, we could access approximately $13 billion of the global life sciences research tools market.”

The total size of that market exceeds $50 billion, according to the company.

10x Genomics launched its first product in 2015 at the 16th annual Advances in Genome Biology and Technology (AGBT), when it introduced the GemCode Platform. The molecular barcoding and analysis platform consisting of instrumentation, reagents and software was an upgrade of existing short-read sequencers designed to generate a new type of sequencing data, linked reads, capable of delivering long-range information, including haplotype phasing, structural variation, and de novo assembly.

From that launch through June 30 of this year, 10x Genomics said it has sold 1,284 instruments to researchers worldwide, including 93 of the top 100 global research institutions based on publications, and 13 of the top 15 global pharmaceutical companies based on 2018 revenue: “We believe that this represents the very beginning of our penetration into multiple large markets.”

“In several years, single-cell genomics has gone from being a leading-edge technology, accessible to just a few sophisticated labs, to becoming a mainstream technology,” Tarjei Mikkelsen, PhD, vice president of biology at 10x Genomics, told GEN recently.

10x Genomics generated $109.4 million in revenue during the first half of 2019, up nearly 85% from $59.2 million in January-June 2018. For all of last year, the company more than doubled its revenue, to $146.3 million from $71.1 million in 2017. That rapid growth enabled 10x Genomics to leapfrog its way up GEN’s A-Lists of Top 10 Sequencing Companies as ranked by revenue, from 9th largest in the 2018 A-List, to 5th in the 2019 A-list, published April 8.

“The key to our success has been rapid non-incremental innovation,” Serge Saxonov, CEO and co-founder of 10x Genomics, told GEN sister publication Clinical OMICs earlier this year. “Most importantly, this comes from awesome people across many different disciplines working together in multi-disciplinary teams. We work hard to nurture the right culture so that these teams are empowered to innovate, create and move with a sense of urgency.”

10x Genomics’ workforce has grown from 110 employees as of December 31, 2015 to 500 employees as of June 30, 2019, according to the S-1 registration statement: “Moreover, we expect that we will need to hire additional accounting, finance and other personnel in connection with our becoming, and our efforts to comply with the requirements of being, a public company.”

10x Genomics was incorporated in Delaware on July 2, 2012 as Avante Biosystems, then changed its name twice—to 10x Technologies in September 2012, and to 10x Genomics in November 2014.

Patent Litigation Risk

In its preliminary prospectus filing, 10x Genomics also acknowledged the risks to its business from years of litigation over whether it infringed on the patents of other companies.

Last week, Judge Richard Andrews of the U.S. District Court for the District of Delaware ordered 10x Genomics to pay Bio-Rad Laboratories $34.5 million—about $10 million more than the $23.9 million that Bio-Rad was awarded last year by a jury that decided 10x Genomics willfully infringed on three U.S. patents owned by the University of Chicago and exclusively licensed to Bio-Rad—U.S. Patent Nos. 8,304,193, 8,329,407 and 8,889,083—in substantially all of its products that use 10x’s GEM microfluidic chips.

The additional $10 million consists of $8,341,368 in supplemental damages based on a 15% royalty rate assessed on the sale of affected products from March 31, 2018 through the date of jury verdict, and $2,202,983 in interest through August 15.

In July, Judge Andrews granted Bio-Rad a permanent injunction barring 10x Genomics to sell single-cell analysis solutions using the GEM chips and based on the patents to new customers, though details have yet to be set.

10x Genomics has appealed to the U.S. Court of Appeals for the Federal Circuit, and as of June 30 had accumulated $55.3 million toward potential damages related to the Bio-Rad litigation.

However, in its preliminary prospectus, 10x Genomics noted that neither the jury verdict nor the injunction related to its Next GEM microfluidic chips and associated consumables, launched in May for three single-cell solutions: Single Cell Gene Expression, Single Cell Immune Profiling and Single Cell ATAC.

“We currently expect that, by the end of the third quarter of 2019, all Chromium instruments that we sell will operate exclusively with our Next GEM solutions and that our Chromium products utilizing our Next GEM microfluidic chips will constitute substantially all of our Chromium sales by the end of 2020,” 10x Genomics stated.

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