About the Author IPOdesktop

During the IPO season Francis Gaskins, editor of IPOdesktop.com & director of research for Equities.com, regularly appears on CNBC TV, Bloomberg, thestreet.com & other financial cable channels. On the day of the Visa IPO he appeared on four cable TV financial shows including Bloomberg & CNBC. Over the past five years he has been quoted over 500 times by such financial media as the Wall Street Journal, Bloomberg, Reuters, Associated Press, USA Today among others. Those quotes are available at IPOdesktop.com. His varied personal interests include violin playing. For example, he is concertmaster of the Palisades Symphony. He also holds an MBA from Harvard Business School (finance) and an AB from Princeton University (economics).

IPO Premium: AutoGenomics

Based in Vista, CA, AutoGenomics (Pending:AGMX) scheduled a $45 million IPO on Nasdaq with a market capitalization of $123 million at a price range midpoint of $12 for Wednesday, Feb.11, 2015.

The full IPO calendar is available at IPOpremium

SEC Documents

Manager, Joint-managers: Stifel, Canaccord Genuity, Cantor Fitzgerald
Co-managers: None

End of lockup (180 days): Monday, August 10, 2015
End of 25-day quiet period: Monday, March 9, 2015

AGMX is a commercial stage molecular diagnostics company offering an innovative and proprietary technology platform to clinical reference laboratories, specialty clinics and hospital laboratories.

AGMX’s platform consists of a family of multiplexing INFINITI analyzers, an extensive and expanding menu of genetic test panels, and proprietary microarrays, reagent modules and other related consumables.


Accumulated deficit ($mm) . . -$104
Per share dilution . . -$10.36
Valuation Ratios Mrkt Cap ($mm) Price /Sls Price /Erngs Price /BkVlue Price /TanBV % offered in IPO
annualizing Sept 9 mos
AutoGenomics $124 4.9 -92.7 7.3 7.3 37%

Neutral slightly plus

Molecular diagnostics

Rev +41%, gross profit +62%

Gross margin 65%

Marginally profitable if loss on debt extinguishment disregarded

Expects to expand US & international sales

Price-to-sales 4.9, Price-to-book, 7.3

$6.2bbmarket, 11% annual compound growth

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

AGMX is a commercial stage molecular diagnostics company offering an innovative and proprietary technology platform to clinical reference laboratories, specialty clinics and hospital laboratories.

AGMX’s platform consists of a family of multiplexing INFINITI analyzers, an extensive and expanding menu of genetic test panels, and proprietary microarrays, reagent modules and other related consumables.

Frost & Sullivan estimated in 2012 that the molecular diagnostics market will reach $6.2 billion in the United States during 2014 and forecasted a compound annual growth rate for the market in excess of 11%.

The Centers for Medicare and Medicaid Services, or CMS, of the Department of Health and Human Services estimated in June 2014 that there were more than 5,900 independent clinical reference laboratories and specialty clinics, and more than 8,900 hospital-based laboratories, in the United States.

AGMX believes that less than 10% of these laboratories are currently performing molecular diagnostics testing, and that AGMX has an opportunity to expand its customer base as more laboratories seek to participate in this growing market.

Automates discrete processes of genetic analysis
AGMX’s INFINITI analyzers, which include the INFINITI, the INFINITI PLUS and the recently introduced INFINITI HIGH THROUGHPUT SYSTEM, or INFINITI HTS, are easy to use and automate a number of the discrete processes of genetic analysis with minimal manual intervention, which reduces AGMX’s customers’ need for multiple, specialized instruments, and offer a variety of throughput capabilities together with a demonstrated high level of accuracy and reproducibility.

AGMX’s genetic tests are focused on large and growing markets primarily in the areas of personalized medicine, women’s health, infectious diseases and genetic disorders.

Genetic tests are performed on AGMX’s INFINITI analyzers using its proprietary BioFilmChip microarrays, related Intellipac Reagent Management Modules and other related consumables.

AGMX believes genetic testing is improving the way patients are diagnosed, monitored and managed, by providing actionable information that can lead to enhanced patient care. AGMX’s genetic tests provide tools to physicians, clinicians and other health care providers to improve detection, treatment and monitoring of a broad spectrum of diseases and conditions.

Sales & distribution
In the United States, AGMX offers its family of INFINITI analyzers to customers either through direct sales, monthly rental plans and the Reagent Access Plan, or RAP.

Under the RAP, an INFINITI analyzer is placed at the customer’s location at no initial cost to the customer. AGMX then seeks to recover the cost of the analyzer over time by generating significant recurring demand for testing consumables, including test-specific BioFilmChips, which are proprietary microarrays, and Intellipac Reagent Management Modules, which provide the proprietary reagent used to complete our genetic tests.

AGMX has established a nine-person domestic direct sales force that is regionally deployed and performs market development as well as account management.

AGMX intends to significantly expand the size of its sales force within the next 12 months.

Internationally, AGMX offers INFINITI analyzers solely through a network of distributors.

AGMX established 12 distributor relationships to market the AGMXr platform in 23 countries outside the United States.

The distributor agreements allow the purchase of products at a discounted price.

The distributors then resell products to customers in the territories covered by their respective agreements.

AGMX plans to expand its distributor network outside the United States.

During the nine months ended September 30, 2014 and 2013, and the years ended December 31, 2013 and 2012, sales outside the United States accounted for 14%, 10%, 14% and 9% of product sales, respectively.

AGMX expects sales growth outside of the United States to keep pace generally with anticipated growth of domestic sales.

AGMX primarily sells BioFilmChips, Intellipac Reagent Management Modules and other consumables pursuant to standard purchase orders.

Intellectual property
As of December 31, 2014, AGMX had eight issued patents and one pending patent application in the United States.

AGMX’s issued patents expire between 2018 and 2026, and the pending patent application, if issued, is expected to expire in 2023, absent any adjustments or extensions.

AGMX’s patents are directed to certain of the technologies relating to the method and design of the BioFilmChip and its film technology, the design of AGMX’s INFINITI analyzers, the Intellipac Reagent Management Module and the system’s chemistry methods, system robotics and signal enhancements.

AGMX faces competition in the molecular testing markets primarily from laboratory-developed tests, or LDTs, and products developed by companies such as Abbott Laboratories Inc., Becton, Dickinson and Company, Cepheid, GenMark Diagnostics, Inc., Hologic, Inc., Luminex Corporation, Qiagen N.V., Roche Holding Ltd. and Thermo Fisher Scientific Inc.

Due to the breadth of its testing menu and the throughput capabilities of its INFINITI analyzers, AGMX believes it does not compete with any of these companies directly across all of its market segments.

5% shareholders pre-IPO
Dennis A. Repp 15%

Fareed Kureshy 12%

Adam Levinson 5%

No dividends are planned.

Use of proceeds
AGMX expects to receive $40 million from its IPO and use it for the following:

$2.0 million to fund capital expenditures for expansion of manufacturing capabilities;

$3.0 million to expand its sales and marketing efforts;

$5.0 million to fund research and development, including $4.0 million to fund its regulatory efforts related to seeking 510(k) clearance for the following seven test panels: CYP450-2B6 QUAD, CYP450-3A4, CYP450-3A5, CYP450-3A4/3A5, CYP450-3A4/3A5 duplex, bacterial vaginosis and CT-NG QUAD;

$21.2 million to satisfy all of its outstanding notes payable and $4.0 million for certain of its accounts payable; and

the balance for working capital and general corporate purposes.

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