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Oxford Immunotec Global PLC (NASDAQ:OXFD), a commercial-stage medical diagnostic firm offering a test for latent tuberculosis, plans to raise $75.0 million in its upcoming IPO. The Abingdon, UK-based firm will offer 5.4 million shares at an expected price range of $13-$15 per share this week. If the IPO can find the midpoint of that range at $14 per share, OXFD will command a market value of $247 million.

OXFD filed on October 15, 2013.
Lead Underwriters: J.P. Morgan Securities LLC, Piper Jaffray & Co.
Underwriters: Cowen and Company LLC, Robert W. Baird & Co.

Summary
OXFD is a global seller of diagnostic tests for immunologically controlled diseases. The firm's proprietary T-SPOT technology platform allows it to measure the responses of the immune system's T cells to help inform the diagnosis, prognosis and monitoring of patients with these diseases. OXFD's initial product is the T-SPOT TB test, which tests for latent tuberculosis infection (LTBI) and has been approved for sale in over 50 countries including the United States, the E.U., Japan and China.

The T-SPOT TB test has also been included in clinical guidelines for TB screening in 17 countries including the United States, several European countries, and Japan. OXFD hopes to replace the archaic Tuberculin Skin Test, which is used for the vast majority of LTBI tests; the T-SPOT TB test features higher sensitivity and simplicity and simpler test administration than the Tuberculin Skin Test, along with the ability to potentially lower healthcare costs.

Valuation
OXFD offers the following figures in its F-1 balance sheet for the nine months ending September 30, 2013:

Revenue: $28,559,000
Net Income: ($5,336,000)
Total Assets: $31,538,000
Total Liabilities: $17,335,000
Stockholders' Equity: $14,203,000

Sales of OXFD's T-SPOT TB test are in a period of rapid growth. As of September 30, 2013, the firm had sold over two million T-SPOT TB tests, with approximately one million tests sold over the 12 months ended September 30, 2013. OXFD has grown its revenue from $4.3 million in 2009 to $20.7 million in 2012, representing a compound annual growth rate of 69%.

Business
The T-SPOT TB certainly shouldn't lack for a market anytime soon; the World Health Organization estimates that two billion people have LTBI, each of whom carries an average 10% lifetime risk of contracting active TB. Approximately nine million people contracted active TB in 2011, leading to 1.5 million deaths.

The primary source of competition for OXFD is the traditional Tuberculin Skin Test, which is used to perform the vast majority of LBTI diagnostics worldwide. The firm will have to overcome significant bias towards the traditional method in order to maximize its profits from the T-SPOT TB diagnostic. OXFD also faces competition from other diagnostic firms and academic and government institutions that may develop a similar diagnostic in the future, although we are not aware of such a development at this time.

Management
CEO Peter Wrighton-Smith, Ph.D. has been with OXFD since its 2002 founding. Dr. Wrighton-Smith previously held senior positions with PowderJect Pharmaceuticals PLC. Dr. Wrighton-Smith holds a Masters in Engineering, Economics & Management, and a Doctorate in Medical Engineering, both from Oxford University.

Conclusion
We're cautiously optimistic on this IPO. We rate this IPO a buy if it prices in the $13 to $15 range for aggressive investors.

OXFD does seem to have discovered something special with its tuberculosis test, and its successes in gaining adoption in the medical guidelines of many countries in the developed world seem to presage significant future revenues. However, there remains the constant threat that another firm will develop a superior tuberculosis diagnostic, instantly evaporating OXFD's potential.

Source: Oxford Immunotec Global IPO Is A Go