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Originally published February 14, 2012 at 1:15 PM | Page modified February 14, 2012 at 9:51 PM

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Atossa Genetics files for IPO, seeks to raise $6 million

The Seattle company is developing tests to diagnose precursors to breast cancer.

Seattle Times business reporter

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Atossa Genetics, a Seattle company that's developing and marketing diagnostic tests for precursors to breast cancer, filed paperwork Tuesday to raise about $6 million in an initial public stock offering.

Atossa launched its first two tests in December and plans to begin marketing two more late this year or early in 2013. It plans to use the IPO proceeds to fund production, sales and marketing of its tests.

In a filing with the U.S. Securities and Exchange Commission, the company said it plans to sell 1 million shares at $5 to $7 per share; assuming they sell at $6, the company would net $4.9 million after fees and expenses. (The underwriter, Dawson James Securities, would have the right to sell up to 1.05 million more shares to cover overallotments.)

Atossa hopes to list its shares on Nasdaq under the symbol ATOS.

Since its 2009 founding by Chairman and Chief Executive Steven Quay, Atossa has raised about $6.2 million from investors — $5.7 million of which came in a private placement last summer. Those unidentified investors received nearly 5.3 million Atossa shares and warrants for another 5.3 million, at an average exercise price of $1.60.

Quay, 61, was CEO of Nastech Pharmaceuticals (later MDRNA, now Marina Biotech) from 2000 to 2008, and invented a system for collecting fluid produced by the breast and analyzing it for abnormal cells. After Quay left MDRNA in late 2008, he acquired the rights to the technology, which is now the basis for Atossa's tests.

The company's lead product, the ForeCYTE Breast Health Test, involves the system to collect and analyze the fluid and combines the results with a woman's medical family history to estimate her 10-year risk of developing cancer.

Other Atossa products are intended to inform the treatment of breast-cancer patients and assess risk of recurrence.

Though the U.S. Food and Drug Administration has cleared the company's underlying technology for marketing, Atossa cautioned potential investors that "many physicians and health-care professionals may be hesitant to introduce new services, or techniques, into their practice" — especially if insurers decline to cover them.

The company also warned that it will need "substantial amounts of capital" to launch its tests, and has no Plan B should the IPO fail or not raise enough money. Atossa has no operating revenues and has accumulated losses of $3.4 million.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com

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