10x Genomics Files for $100 Million IPO Amid Heavy R&D and Legal Expenses

On August 20, 2019, single-cell sequencing company 10x Genomics officially announced its filing for an initial public offering (IPO). Although 10x Genomics did not disclose the expected price range, according to documents submitted by the company to the U.S. Securities and Exchange Commission on Monday, it plans to raise $100 million through the IPO. It is reported that 10x Genomics will trade under the ticker symbol “TXG,” with JPMorgan, Goldman Sachs, and Bank of America serving as joint bookrunners.

In its prospectus, the company stated that its total revenue for fiscal year 2018 was $146.3 million, with a net loss of $112.5 million. As of June 30, 2019, the company held $56 million in cash and cash equivalents and had 1,285 instruments installed, with consumables valued at approximately $81,000 per instrument. For the six months ended June 30, the company reported a net loss of $14.5 million.

10x Genomics stated that it plans to use the net proceeds from its IPO for general corporate purposes and indicated that a portion of the funds may be used to acquire businesses, products, or technologies.

In its prospectus, the company noted that 10x has entered into a loan and security agreement with Silicon Valley Bank. Under this agreement, 10x had $30 million in outstanding term loans. The company also maintained a $25 million revolving credit facility and an additional term loan commitment of up to $20 million, both available for drawdown until December 31, 2019. 10x stated that it intended to make “partial draws” under the revolving credit facility to ensure debt service capability. As of June 30, the outstanding principal balance of its term loans was $29.7 million.

The company also pointed out that its net loss in 2018 was related to a $62.4 million expense for "intellectual property acquisitions for R&D purposes" and $38 million in litigation costs in the fourth quarter of 2018.

The company is currently engaged in a legal dispute with Bio-Rad Laboratories. Under a prior ruling, 10x Genomics was ordered to pay approximately $34 million in fines and was prohibited from selling any infringing products to new customers. In the first half of fiscal year 2019, 10x Genomics incurred $15.9 million in patent litigation expenses.

The temporary setback in the patent battle has not defeated 10x; the company has already appealed the ruling and further disclosed that it expects to launch its Visium spatial genomics product line by late 2019.