China's Genetron trades flat after upsizing US IPO

It is the second offering by a Chinese genetic testing specialist in just over a week. Burning Rock Biotech raised $222.8 million and then closed at a 49% premium to the IPO price on its first day of trading. As of June 19, it was up 75%.

Genetron sold 16 million American Depository Shares (ADS) at $16 apiece, according to a filing, above the indicative range of $11.50-13.50. The offering was upsized from 13 million shares and underwriters have the option to buy 2.4 million more, which would bring the proceeds to $294.4 million. Genetron opened at $16.98 on June 19 before falling back to close at $16.

Several existing investors, including Vivo Capital, wanted to buy $54 million worth of shares in the offering, the prospectus shows. Vivo also took part in a $50 million Series D round – alongside China International Capital Corporation (CICC) and Alexandria Venture Investments, among others – announced when Genetron made its IPO filing last November. Vivo previously contributed $15 million to the Series C.

CICC is the largest external shareholder with a 13.1% stake, while Vivo has 5.8%. The founders and management team together control more than one-third of the company. Several investment vehicles established for high net worth individuals also feature in the cap table.

Genetron was founded in 2015 by Sizhen Wang and Hai Yan, who serve as CEO and chief scientific officer, respectively. Wang previously set up an internet-based long-distance telephone service, while Yan was a professor of neuro-oncology at Duke University's school of medicine and led the molecular genomics lab at Duke Cancer Center.

The company describes itself as a precision oncology platform that covers every stage of cancer care, from early screening, to diagnosis and treatment recommendations, to continuous monitoring. Genetron builds patient health profiles based on behavioral, genomics, and medical data that help doctors make assessments and manage treatment.

It is China's third-largest provider of cancer molecular diagnostic services based on next-generation sequencing (NGS) for laboratory-developed tests (LDT) with an 11.6% market share in 2019, according to Frost & Sullivan. Genetron also produces equipment for in vitro diagnostic (IVD) testing. The company has contracts with 30 hospitals nationwide. Between January 2017 and March 2020, it provided more than 50,000 LDT. Genetron's IVD assays have been included in the centralized procurement systems in 10 provinces.

Less advanced business areas include early screening for cancer – a proprietary liver cancer assay is currently in the testing phase and the company is participating in early screening studies for other types of cancer – and customized technologies for drug developers.

Genetron generated RMB323.4 million ($45.7 million) in revenue in 2019, up from RMB225.2 million the previous year. Over the same period, its net loss widened from RMB464.9 million to RMB676 million. During the first four months of 2020, revenue came to RMB108.4 million, more than two-thirds of it from the provision of LDT services.

China's genetic testing space has attracted a considerable amount of private equity and venture capital investment. For NGS testing specifically, Geneseeq, Genecast Biotechnology, Gene+ Technology, and WuXi NextCode have all received funding, as well as Burning Rock. Last month, MGI Tech, a manufacturer of gene sequencing devices, closed a $1 billion round said to be the largest ever seen in China's genetics technology industry.

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• Topics
• Greater China
• Healthcare
• IPO
• China
• CICC
• Vivo Ventures