IPO Report: HTG Molecular Diagnostics (HTGM)

Francis Gaskins  |

HTG Molecular Diagnostics (HTGM) is a commercial stage company that developed and markets a novel technology platform to facilitate the routine use of complex molecular profiling. It is based in Tucson, AZ.

Eleven other companies are scheduled to IPO for the week of May 4. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Leerink Partners

Co-managers: Canaccord Genuity/ JMP Securities

End of lockup (180 days): Tuesday, November 3, 2015

End of 25-day quiet period: Monday, June 1, 2015

HTGM scheduled a $50 million IPO with a market capitalization of $94 million at a price range midpoint of $14 for Wednesday, May 6, 2015 on Nasdaq.

HTG Molecular Diagnostics IPO Summary

HTGM is a commercial stage company that developed and markets a novel technology platform to facilitate the routine use of complex molecular profiling.

HTG Molecular Diagnostics IPO Valuation


Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

HTG Molecular Diagnostics (HTGM)








HTG Molecular Diagnostics IPO Conclusion

Complex molecular profiling

Neutral slightly plus

Shareholders may purchase $25mm on the IPO, 50%

Merck Capital & Novo A/S own 45% pre-IPO

Revenue +48% to $3,3mm, -419% loss on revenue

Emphasizing consumable sales, see report

P/E of -6.7 indicating relatively heavy cash burn rate relative to market cap

Price-to-book of 2.6, on the relatively low side

Selling 53% on the IPO

HTG Molecular Diagnostics Business

HTGM is a commercial stage company that developed and markets a novel technology platform to facilitate the routine use of complex molecular profiling.

Cancer profiling market

Based on published industry reports, the cancer profiling market is estimated to be $17.8 billion today and is expected to grow to $35.0 billion by 2018.

Automated platform

HTGM’s HTG Edge automated platform can quickly, robustly and simultaneously profile thousands of clinically relevant molecular targets from samples a fraction of the size required by current technologies.

HTGM’s objective is to establish the HTG Edge platform as a standard in molecular profiling and make this capability accessible to all molecular labs from research to clinic.

Target customers

HTGM believes that its target customers desire high quality molecular profiling information in a multiplexed panel format from increasingly smaller samples, with the ability to do this locally to minimize turnaround time and cost.

The HTG Edge platform was designed to meet these needs and is empowering pathologists, clinicians and molecular labs to directly control the molecular profiling of patient samples.

HTG Molecular Diagnostics Revenue

Product revenue

Product revenue includes revenue from the sale of instruments and consumables.

Revenue from the sale of instruments is derived from the sale of the HTG Edge system.

Revenue from the sale of instruments represented 30% and 24% of total revenue for the years ended December 31, 2013 and 2014, respectively.

Consumable revenue

Revenue from the sale of consumables is derived from the sale of molecular profiling panels for use on the HTG Edge platform, and from the sale of custom molecular profiling panels that HTGM has developed for some of its customers.

As of December 31, 2014, HTGM offered seven proprietary panels designed for use in drug development. Consumable revenue represented 4% and 30% of total revenue for the years ended December 31, 2013 and 2014, respectively.

Service revenue

Service revenue consists of the design of custom panels for biopharmaceutical customers, research services and sample processing.

HTGM has shifted its focus away from this aspect of the business model.

Service revenue represented 42% and 15% of total revenue for the years ended December 31, 2013 and 2014, respectively.

Other revenue

Other revenue consists of licensing fees and grant revenues.

Revenue from grants represented 23% and 31% of total revenue for the years ended December 31, 2013 and 2014, respectively.

In August 2013 HTGM was awarded a grant from the National Institutes of Health, or NIH, to develop commercial applications for its proprietary nuclease probe mediated sequencing technology.

This NIH grant is scheduled to be completed in June 2015.

HTGM recognized $0.5 million and $1.0 million of income from the NIH grant in 2013 and 2014, respectively.

HTGM expects to recognize the remaining $0.3 million of revenue from the NIH grant in early 2015 and does not anticipate additional revenue from new grant activity in 2015.

HTG Molecular Diagnostics Platform capabilities

HTGM’s platform’s capabilities are also enabling biopharmaceutical companies and research centers to better leverage the power of molecular profiling in their preclinical and clinical applications.

Molecular profiling is the analysis of multiple DNA, RNA and protein targets in biological samples, such as tissue, blood or urine, to identify expression patterns or genomic changes.

Molecular profiling is enabling a paradigm shift from the traditional approach of looking at one molecule at a time to the simultaneous analysis of thousands of molecules.


There are numerous applications of molecular profiling, such as whole genome sequencing for the discovery of novel genetic variants and the assessment of patient samples to identify biomarkers or molecular markers of disease that can aid in diagnosis, gauge patient prognosis or predict response to an available therapy.

New molecular targets

Significant discoveries of new molecular targets, such as in the field of immuno-oncology, are creating substantial growth in targeted tumor profiling for molecular diagnostic testing, biomarker development and translational research in oncology and other diseases.

HTG Molecular Diagnostics Intellectual property

HTGM’s patent portfolio includes 12 patent families that, collectively, consist of eight issued U.S. patents, 23 granted foreign patents (variously in Australia, Canada, China, Japan, France, Germany, Italy, Spain, and United Kingdom), and 35 patent applications pending in the U.S. and foreign jurisdictions.

This portfolio is directed to HTGM’s nuclease-protection-based technologies as well as to lung cancer and melanoma biomarker panels discovered using its nuclease-protection-based technology, which will help HTGM maintain an exclusive position in key areas of its business, including targeted nuclease-protection based sequencing, and, if HTGM should so elect, may provide opportunities for out-licensing melanoma- or lung-cancer-related content.

The recently issued U.S. patent directed to HTGM’s novel HTG EdgeSeq methods will expire in April 2032.

Worldwide, HTGM has 26 patents in the two patent families directed to its HTG Edge plate-based methods; these patents will begin to expire at the end of December 2017 with the last ones expiring in June 2022.

HTG Molecular Diagnostics Competition

HTGM has categorized known competition into:

Other molecular platform offerings such as PCR-based technologies, microarrays and next generation sequencers from companies such as Roche Diagnostics, Inc. Qiagen N.V., Illumina, Inc., Affymetrix, Inc., NanoString Technologies, Inc., Abbott Laboratories, Exiqon A/S, Fluidigm Corporation, Luminex Corporation and Thermo Fisher Scientific, Inc.

Centralized CLIA labs offering molecular profiling and gene expression tests as laboratory-developed tests, or LDTs, such as Foundation Medicine, Inc. and Genomic Health, Inc.

NGS target enrichment technologies from companies such as Agilent Technologies, Inc. and RainDance Technologies, Inc.

Decentralized CLIA labs developing LDTs locally such as major cancer centers

HTG Molecular Diagnostics 5% shareholders pre-IPO

Novo A/S0        25.7%

S.R. One Limited           20.4%

Merck Capital Ventures, LLC      20.1%

Entities affiliated with Fletcher Spaght Ventures 12.8%

Solstice Capital II, L.P.              6.1%

Entities affiliated with Valley Ventures    5.6%    

Harry A. George            6.1%

Larry Senour     20.1%

HTG Molecular Diagnostics Dividends

No dividends are planned.

HTG Molecular Diagnostics IPO Use of Proceeds

HTMG expects to receive $44 million from its IPO and use it for the following:

$18.5 million for sales and marketing and general and administrative expenses;

$7.7 million for research and development expenses, including:

$4.4 million for personnel costs, including expansion of its research and development team; and

$3.3 million for the development of new applications and profiling panels;

$4.8 million for repayments on its (i) outstanding loan borrowed under its loan and security agreement with Silicon Valley Bank and Oxford Finance LLC, which bears interest at the rate of 8.5% per annum and matures in September 2018, and which loan proceeds have been used to fund its operations and (ii) Nuvogen obligation; and

the remainder to fund working capital and other general corporate purposes.


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Symbol Name Price Change % Volume
HTGM HTG Molecular Diagnostics Inc. 3.00 -0.06 -1.96 297,691 Trade



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