We estimate that the net proceeds from our issuance and sale of 5,000,000
shares of our common stock in this offering will be approximately $38.6
million, or approximately $44.9 million if the underwriters exercise their
over-allotment option in full, based upon the initial public offering price
of $9.00 per share, after deducting underwriting discounts and commissions
and estimated offering expenses payable by us.
We currently expect to use the net proceeds from this offering as follows:
• $5.2 million upon the closing of this offering to pay dividends on the
outstanding shares of Series F redeemable convertible preferred stock that
will convert into common stock;
• approximately $16.9 million to hire additional sales and marketing personnel
and to support costs associated with increased sales and marketing activities;
• approximately $12.0 million for capital expenditures, including components
of the Vantera system and other improvements to our laboratory
infrastructure;
• approximately $3.6 million to fund our research and development programs,
including the expansion of our diagnostic test menu based on the Vantera
system; and
• the balance for other general corporate purposes, including general and
administrative expenses, working capital and the potential repayment of
indebtedness.
In addition, we may use a portion of the net proceeds from this offering to
acquire, invest in or license complementary products, technologies or
businesses, but we currently have no agreements or commitments with respect
to any potential acquisition, investment or license. We may allocate funds
from other sources to fund some or all of these activities.
The expected use of net proceeds from this offering represents our intentions
based upon our present plans and business conditions.
Pending their use, we intend to invest the net proceeds of this offering in
a variety of capital-preservation investments, including short- and
intermediate-term, interest-bearing, investment-grade securities.
We compete primarily against the conventional lipid panel test as well as
alternative methods of measuring cholesterol concentrations or
lipoproteins.
The lipid panel test is widely ordered by physician offices and performed in
substantially all clinical diagnostic laboratories. It is relatively
inexpensive and reimbursed by virtually all payors. However, the market for
lipid panel tests is highly fragmented, and there is no dominant provider
for these tests.
We also compete against companies that offer other methods for measuring
lipoproteins. Unlike our technology, however, these methods require
lipoproteins to first be physically separated on the basis of differences
in size or density or composition before being measured. These physical
separation methods generally involve relatively labor-intensive steps to
separate the sample and are more time-consuming and more costly to perform
than the NMR LipoProfile test. Among the companies providing these tests are
Berkeley HeartLab, Inc., now part of Quest Diagnostics, as well as Atherotech,
Inc. and SpectraCell Laboratories.
There are also diagnostic tests available that measure other lipoprotein
indicators of cardiovascular disease risk, including apolipoprotein B, or
apoB, a protein found on both LDL and VLDL particles. Plasma apoB levels
provide a measure of the aggregate number of LDL plus VLDL particles. While
an apoB test is generally less expensive than our NMR LipoProfile test, it
does not offer the breadth of information useful in the management of CHD
risk provided by our test, including:
• measures related to cardiovascular risk, including HDL-P, the total number
of small LDL particles, and LDL particle size; and
• measures associated with insulin resistance and diabetes risk, including
numbers of large HDL particles, small LDL particles and large VLDL particles,
as well as HDL, LDL and VLDL particle size.
The apoB test is a non-proprietary test offered by many clinical diagnostic
laboratories. We believe that the lack of universal standardization of the
apoB test has limited its use by physicians.
In order for us to successfully compete against these alternative tests and
technologies, we will need to demonstrate that our products deliver superior
results and value as a result of our key differentiators, including FDA
clearance, clinical validation, improved patient outcomes, accessibility,
ease of use, speed and efficiency, scalability and economic benefits.
provides physicians
and their patients with actionable information to personalize management of risk
for heart disease. To date, over 8 million NMR LipoProfile tests have been
ordered. Our automated clinical analyzer, the Vantera system, has recently been
cleared by the FDA. The Vantera system requires no previous knowledge of NMR
technology to operate and has been designed to significantly simplify complex
technology through ease of use and walk-away automation. We plan to selectively
place the Vantera system on-site with national and regional clinical
laboratories as well as leading medical centers and hospital outreach
laboratories. We are driving toward becoming a clinical standard of care by
decentralizing our technology and expanding our menu of personalized diagnostic
tests to address a broad range of cardiovascular, metabolic and other diseases.
Approximately 50% of people who suffer a heart attack have normal cholesterol
levels. We believe that direct quantification of the number of LDL and other
lipoprotein particles using our NMR-based technology platform addresses the
deficiencies of traditional cholesterol testing and allows clinicians to more
effectively manage their patients’ risk of developing cardiovascular disease. We
believe that the inherent analytical and clinical advantages of NMR-based
technology, which can simultaneously analyze lipoproteins as well as hundreds of
small molecule metabolites from blood serum, plasma and several other bodily
fluids without time-consuming sample preparation, will also allow us to expand
our diagnostic test menu. The scientific community is actively investigating our
NMR-based technology for use in the prediction of diabetes, insulin resistance
and other metabolic disorders, and we believe that our technology provides an
attractive platform for potential expansion of the diagnostic tests we plan to
offer into these areas.
Our strategy is to continue to advance patient care by converting clinicians,
and the clinical diagnostic laboratories they use, from traditional cholesterol
testing to our NMR LipoProfile test for the management of patients at risk for
cardiovascular disease, with the goal of ultimately becoming a clinical standard
of care. An increasing number of large clinical outcome studies, including the
Multi-Ethnic Study of Atherosclerosis, or MESA, and the Framingham Offspring
Study, indicate that a patient’s number of LDL particles is more strongly
associated with the risk of developing cardiovascular disease than is his or her
level of LDL cholesterol when one of the measures suggests a higher risk and the
other suggests a lower risk. LDL cholesterol, or LDL-C, is a measure of the
amount of cholesterol contained in LDL particles and is used to estimate the
patient’s LDL level. In the MESA and Framingham studies, participants’ blood
samples were evaluated to measure LDL particles using our NMR LipoProfile test,
while their LDL-C levels were measured using a traditional cholesterol test.
Because the NMR LipoProfile test provides direct quantification of the number of
LDL particles, as well as additional measurements related to a patient’s risk
for developing cardiovascular disease, we believe that it has the potential to
become a new paradigm by which clinicians evaluate key cardiovascular risk
factors to provide better treatment recommendations and improve outcomes, even
for patients considered to have normal levels of cholesterol. A 2008 joint
consensus statement by the American Diabetes Association, or ADA, and the
American College of Cardiology, or ACC, recognized that direct LDL particle
measurement by NMR may be a more accurate way to capture the risk posed by LDL
than is traditional LDL-C measurement. Additionally, in October 2011, the
National Lipid Association, or NLA, convened an expert panel to evaluate the use
of a number of biomarkers other than LDL-C, including LDL particle number,
for initial clinical risk assessment of cardiovascular disease and ongoing
management of cardiovascular disease risk in patients. The recommendations
of this panel included:
• for initial clinical risk assessment, the use of LDL particle number, as
well as a number of the other non-LDL-C biomarkers, is reasonable for many
patients considered to be at intermediate risk of coronary heart disease,
patients with a family history of coronary heart disease and patients with
recurrent cardiac events, and it should be considered for selected patients
known to have coronary heart disease; and
• for ongoing management of risk, the use of LDL particle number, as well
as some of the other biomarkers, is reasonable for many patients at
intermediate risk, patients with known coronary heart disease and patients
with recurrent cardiac events, and it should be considered for selected
patients with a family history of coronary heart disease.
During 2011, the NMR LipoProfile test was ordered more than 1.5 million times.
The number of NMR LipoProfile tests ordered increased at a compound annual
growth rate of approximately 30% from 2006 to 2011. We generated revenues of
$45.8 million for the year ended December 31, 2011 and $41.2 million for the
nine months ended September 30, 2012. Our NMR LipoProfile test has its own
dedicated current procedural terminology, or CPT, code, and is reimbursed by a
number of governmental and private payors, which we believe collectively
represent approximately 150 million covered lives. These payors include
Medicare, TRICARE, WellPoint, United Healthcare and several Blue Cross Blue
Shield affiliates.
We estimate that more than 75 million traditional cholesterol tests, or lipid
panels, are performed by independent clinical laboratories and hospital outreach
laboratories for patient management purposes each year in the United States.
Accordingly, we estimate that the 1.5 million NMR LipoProfile tests we performed
in the year ended December 31, 2011 represented 2% of our potential market. In a
number of states where we have targeted our sales and marketing efforts, we
estimate that we have achieved market penetration rates of up to 11%. For
example, in North Carolina, Alabama and West Virginia, we estimate that the
number of NMR LipoProfile tests performed represented approximately 11%, 7% and
7%, respectively, of the total cholesterol tests performed in those states for
patient management purposes, and 6% in Georgia. We plan to significantly
increase our geographic presence across the United States to expand market
awareness and penetration of the NMR LipoProfile test, with the goal of
ultimately becoming a clinical standard of care.
Our clinical laboratory, which is certified under the Clinical Laboratory
Improvement Amendments of 1988, or CLIA, allows us to fulfill current demand for
our test and we believe serves as a strategic asset that will facilitate our
ability to launch new personalized diagnostic tests we plan to develop. To
accelerate clinician and clinical diagnostic laboratory adoption of the NMR
LipoProfile test and future clinical diagnostic tests, we plan to decentralize
access to our technology platform through the launch of our new Vantera system,
our highly automated next-generation version of our NMR-based clinical analyzer
technology platform that is designed to be placed directly in clinical
diagnostic laboratories. In August 2012, we received FDA clearance to market our
Vantera system. The Vantera system became commercially available in December
2012, and we expect to begin placing the Vantera system in third-party clinical
diagnostic laboratory facilities in the first quarter of 2013, which we believe
will facilitate their ability to offer our NMR LipoProfile test and other
diagnostic tests that we may develop.
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We were incorporated under the laws of North Carolina in June 1994 under the
name LipoMed, Inc. and reincorporated under the laws of Delaware in June
2000. In January 2002, we changed our corporate name to LipoScience, Inc.
Our principal executive office is located at 2500 Sumner Boulevard, Raleigh,
North Carolina. Our telephone number is (919) 212-1999. Our website address
is www.liposcience.com.