As computing power gets more and more sophisticated, researchers are getting better data on the human genome, which has the potential to unlock many of our species’ secrets.
Banking on this is NanoString Technologies — one of the leaders in the space that has announced plans to go public.
Founded in 2003, NanoString is a spinoff of the Seattle-based Institute for Systems Biology. By leveraging extensive academic research, the company has gone on to develop next-generation machines that help analyze genomic information.
Its flagship product, the nCounter Analysis System, can profile hundreds of molecules simultaneously by using innovative barcoding technology. It has been helpful in isolating genes that are responsible for various diseases.
So far, NanoString has more than 130 systems installed in universities, government institutions and biotech companies that have led to the publication of more than 200 peer-review papers, which have the potential of resulting in major breakthroughs.
However, the biggest opportunity seems to be NanoString’s move in the highly lucrative testing equipment market. To this end, the company has built Prosigna, which focuses on breast cancer. The device has received approval in the EU and is currently going through the FDA process in the U.S. If things go according to plan, Prosigna could be available here by 2014.
While it’s difficult to gauge the revenue potential on this product, it’s likely substantial, given that every year we see 1.4 million cases of breast cancer worldwide.
Nanostring also has a solid business model. Not only does the company get large fees for the equipment (though the exact price isn’t broken out), but also recurring income of an average of $100,000 per year from the sale of consumables.
Nanostring plans to use the IPO proceeds primarily for the commercialization of Prosigna. The company plans to list on the Nasdaq under the symbol of NSTG, and lead underwriters include JPMorgan (JPM), Morgan Stanley (MS), Leerink Swann and Baird.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.