China cancer screening business gains on Hong Kong debut

The company sold 76.6 million shares for HK$26.6 apiece, representing the top end of the indicative range, according to a filing. Cornerstone investors, including Invesco, Lake Bleu Capital, Boyu Capital, and GIC, covered just over half of the offering. New Horizon’s stock opened at HK$76 on February 18 and closed at HK$84.

Legend Capital is the largest external shareholder post-IPO with a 9.9% stake. VMS Holdings, a Hong Kong–based asset management firm, Qiming Venture Partners and SBCVC owns 8.7%, 8.6% and 5.4% respectively.

Founded in 2015, New Horizon's key assets are two colorectal cancer screening products, Pupu Tube and ColoClear.

Pupu Tube targets the broad cancer screening market, estimated to number 633 million people in China. It is the first self-conducted fecal immunochemical test (FIT) product approved by the country's National Medical Products Administration (NMPA).

ColoClear is the first - and so far only - approved molecular cancer screening test in China. It aimed at the 120 million-strong high-risk colorectal cancer population. Registrational trials indicated a 95.5% success rate in detecting colorectal cancer and 63.5% for advanced adenoma.

According to Frost & Sullivan, the colorectal cancer screening market in China grew from RMB2.5 billion ($385 million) in 2015 to RMB3 billion in 2019. It is expected to reach RMB19.8 billion by 2030. The market remains largely untapped with a penetration rate of 16.4% in 2019, compared to 60.1% in the US.

New Horizon has two late-stage product candidates: a stool-based self-conducted screening test for gastric cancer and a urine-based home-use screening test for cervical cancer. The company markets its products through hospitals, health checkup centers, insurance companies, pharmacies, and online channels.

Revenue amounted to RMB58.3 million in 2019, up from RMB18.8 million the previous year. Over the same period, the net loss narrowed to RMB106.5 million from RMB224.9 million. For the first nine months of 2020, New Horizon's revenue and net loss were RMB35.3 million and RMB533.8 million, respectively.

The company raised has raised more than $160 million since its inception in 2013. An angel round of RMB5 million was followed by a $20 million Series A in 2016 provided by Legend and SBCVC. They put in another $20 million a year later, joined by Qiming.

VMS led a $66 million Series C in 2019 and Omniscience performed the same role in a $20 million Series D in April 2020. Later the same year, Rock Springs Capital led a $30 million Series E round that also featured OrbiMed and Lilly Asia Ventures. 

"New Horizon will address China's big unmet cancer screening demand, and early detection will hopefully increase the survival rate for cancer patients. The market size in China is expected to exceed RMB150 billion. As an early entrant, New Horizon Health has overcome regulatory and operational barriers with strong R&D and clinical capacities,” said Nisa Leung, a managing partner at Qiming.

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• Topics
• Greater China
• IPO
• Healthcare
• Qiming Venture Partners
• Legend Capital
• Softbank China Venture Capital
• Lilly Asia Ventures