10x Genomics today launched its initial public offering (IPO), raising an estimated $357.5 million in net proceeds that the company has said will be used toward general corporate purposes, and could be used toward future acquisitions.
The net proceeds, disclosed today in a regulatory filing, could ultimately rise to approximately $411.9 million, if the underwriters of the IPO were to exercise in full their option to purchase up to 1.5 million additional shares at the IPO price, less discounts and commissions.
In its first trading day on the NASDAQ Global Select Market, where its shares trade under the symbol TXG, 10x Genomics sold 10 million shares at $39 for gross proceeds of $390 million—well above the company’s initial projections that it would raise up to $315 million in gross proceeds by selling 9 million shares at between $31 and $35 a share.
10x Genomics’ share price zoomed 48%, peaking at $57.83 in early trading as of 11:05 a.m., before dipping to $55.85 as of 2:30 p.m. EDT, still 43% above the initial offering price.
The IPO exceeded the up-to-$362.25 million proposed offering that 10x Genomics revealed September 3 in an S-1/A amended registration statement—two weeks after the company filed its initial S-1 registration statement, in which it disclosed plans to raise $100 million.
In that initial S-1 registration statement, filed August 19, 10x Genomics said proceeds from the IPO would go toward general corporate purposes that included “working capital, operating expenses and capital expenditures.”
“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,” the company added.
The IPO is expected to close on September 16, subject to the satisfaction of customary closing conditions, 10x Genomics said.
Headquartered in Pleasanton, CA, 10x Genomics is a developer of integrated solutions including instruments, consumables and software for analyzing biological systems at previously inaccessible resolution and scale.
“Century of Biology”
“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 its filing today, and stated in its earlier IPO filings.
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.
However, in its IPO filings, 10x Genomics has also acknowledged the risks to its business from years of litigation over whether it infringed on the patents of other companies.
In August, 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 consisted 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
Next GEM Patent Dispute
In an Update and Supplement to Preliminary Prospectus filed yesterday, 10x Genomics acknowledged Bio-Rad’s third and latest legal challenge to the company.
Bio-Rad said yesterday it has sued 10x Genomics in the Delaware district court, contending 10x Genomics’ Next GEM products infringed upon some claims of U.S. Patent No. 8,871,444, which covers techniques for detecting enzymatic reactions in microfluidic droplets. Bio-Rad said it has exclusively licensed from Harvard University and the UK Medical Research Council.
“Bio-Rad will continue to grow and protect its portfolio of patents in the droplet microfluidics space that deliver differentiated genomics technologies and enable world class research,” Norman Schwartz, Bio-Rad President and CEO, said yesterday in a statement.
In its prospectus update, 10x Genomics asserted that it “believes that the ‘444 patent is invalid and not infringed, and intends to defend itself vigorously.”
J.P. Morgan Securities, Goldman Sachs & Co., and BofA Merrill Lynch are lead joint book-running managers for the 10 Genomics IPO, with Cowen acting as lead manager.