Foundation Medicine: A Unique Cancer Play Backed By Google Ventures
With the earnings season now upon us, investors have an opportunity to look for companies that are expecting to see strong growth over the next year. Companies may raise guidance and growth expectations for a number of reasons. Sometimes the growth is a temporary blip, but sometimes it represents a long-term shift that should take the company to new highs. One company that appears to be setting up for significant long-term growth is Foundation Medicine (NASDAQ:FMI).
Foundation Medicine is a molecular information company focused on revolutionizing the way that cancer patients are treated. The company has developed a proprietary molecular information plan that generates actionable genomic information about a patient’s individual cancer, enabling doctors to optimize treatments in clinical practice. This platform will also allow biopharmaceutical companies to develop targeted oncology therapies more effectively.
The company held its initial public offering (or, IPO) on September 25, 2013. The company sold 5.9 million shares at an offering price of $18 per share. The final price was higher than the initial range of $14-$16, which typically signals strong demand. Since the IPO, shares of Foundation Medicine have swung around pretty violently. Shares traded as high as $41.51 following the IPO but then sold off over the next few months before reaching an eventual 52-week low of $20.00. A catalyst was needed to spark some life back into the trading volume and that catalyst occurred just a few days ago when Foundation Medicine announced preliminary unaudited results for the year ended December 31, 2013. For 2013, FMI generated revenue of approximately $29 million compared to just $10.6 million for the prior year. That represents a year-over-year increase of just under 200 percent. The company also reported that it had sold approximately 3,750 FoundationOne clinical tests during the fourth quarter of 2013, compared to just 2,577 during the third quarter.