ArcherDX files for $100M IPO as it plans to submit flagship test to FDA

BOULDER— ArcherDX Inc. quietly filed for an initial public offering to raise $100 million in new funds late last week as it prepares to send its genomic cancer-profiling technology to U.S. regulators later this year.

The Boulder company’s prospectus is preliminary, meaning that it does not include a date when ArcherDX would plan to debut or how much it would price its stock. It intends to list on the Nasdaq under the ticker symbol RCHR.

However, the maximum amount of funding it could raise as proposed is $100 million, with the principal goal being development and marketing of Stratafide, a broad test to identify genomic mutations that may cause cancer growth in patients.

It said it will submit Stratafide to federal drug regulators later this year, with plans to go to market in 2021.

ArcherDX develops genomic toolkits for cancer patients to determine if their genes would respond more effectively toward one type of cancer-inhibiting treatment versus another, along with cancer-monitoring tools. In particular, the company said it hopes to bring this type of testing out of research hospitals and into regional hospitals. It estimates that about 85% of patients are being treated at these facilities, which often don’t have the technical infrastructure to run genomic tests in-house.

The company said the majority of its revenues to date come from research-use-only products that are co-developed alongside cancer treatments made at major pharmaceutical firms, such as Bayer AG (FWB: BAYN) and Merck KGaA.

In particular, Merck KGaA made up 44% of ArcherDX’s revenue in 2019 alone.

ArcherDX estimates that the market for these tools can range up to $45 billion, with $16.3 billion of that available within the U.S. The lion’s share of that market is expected to come from in-vitro diagnostics such as Stratafide.

While ArcherDX has been successful in raising more than $150 million in several rounds and inking development deals with major firms, its prospectus lays out stark financial and legal hurdles toward profitability.

The prospectus provides the first public look at ArcherDX’s books, showing that the company’s revenue growth has been outpaced by its operating expenses. The company’s total revenue shot up from $28.45 million in 2018 to $50.56 million in 2019 for a 77% year-over-year increase. But the company’s net losses ran from just $5.55 million to $40.97 million in the same time period, amounting to a 638% increase.

ArcherDX doesn’t expect to immediately turn profitable after its public debut as it plans to continue spending heavily to develop its new market.

“We expect our losses to continue as we continue to devote a substantial portion of our resources to efforts to increase the adoption of, and reimbursement for, our products and services,” the company said in its filing.

As of March 31, the company has $97.5 million in total assets, with $36.84 million in cash and liquid equivalents. It is liable to issue up to $115.34 million in shares to early investors who traded capital for future equity in previous fundraising rounds.

ArcherDX also disclosed that it is being sued in federal court by California competitor Natera Inc. (Nasdaq: NTRA), which claimed in January that it held the intellectual property rights to the chemical processes ArcherDX uses for its tests. The Boulder company filed a motion to dismiss the suit Thursday, but said if it fails to defend itself in court, it would have to redesign its tests from scratch. That process would be sure to sink the company and undo seven years of research.

The offering’s joint underwriters are J.P. Morgan, Stifel Securities, Bank of America Securities and Evercore ISI.

on Facebook on LinkedIn