Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Burning Rock Biotech / Equity Capital Markets

Burning Rock, a leading precision oncology player in China, is aiming to raise USD 100 million via a listing in the US. The company is the number one next generation sequencing (NGS) based cancer therapy selection company with a 26.7% share in China by patients tested in 2019.While the company derives most of its revenues from the central lab model, its in-hospital model which is characterized by recurring sales of reagent test kits is also growing rapidly. However, looking at the company's disclosure in the IPO prospectus, we think there is a lack of details for the technical specifications of its core products. In addition, we believe that the potential market estimates provided in the prospectus are too aggressive given that the test kits, particularly the big panels, are unlikely to be included in the reimbursement plan in the foreseeable future and hence remain a luxury product. We are of the view that the company has quality pre-IPO investors and management team. The company was valued at USD 814 million in the pre-IPO round. We will provide our thoughts on valuation in our next note.

Burning Rock, a leading precision oncology player in China, is aiming to raise USD 100 million via a listing in the US. The company is the number one next generation sequencing (NGS) based cancer therapy selection company with a 26.7% share in China by patients tested in 2019.While the company derives most of its revenues from the central lab model, its in-hospital model which is characterized by recurring sales of reagent test kits is also growing rapidly. However, looking at the company's disclosure in the IPO prospectus, we think there is a lack of details for the technical specifications of its core products. In addition, we believe that the potential market estimates provided in the prospectus are too aggressive given that the test kits, particularly the big panels, are unlikely to be included in the reimbursement plan in the foreseeable future and hence remain a luxury product. We are of the view that the company has quality pre-IPO investors and management team. The company was valued at USD 814 million in the pre-IPO round. We will provide our thoughts on valuation in our next note.

Burning Rock (燃石医学) Pre-IPO: Leading Precision Oncology Player but Short of Disclosure

Genetron Holdings Ltd / Equity Capital Markets

Genetron, a China-based precision oncology company, plans to raise up to USD 100 million to list in the US. Genetron was founded by Dr Yan, a leading academic researcher in the field of glioblastoma (GBM, one type of brain cancer). Dr Yan’s experienced helped the development of IDH1/TERT gene assay for the GBM indication dramatically due to the vast amount of data accumulated during Dr Yan’s work. In addition to the IDH1/TERT assay which was approved by the NMPA in 2017, the company also has two gene sequencing instruments approved by the NMPA, namely Genetron 3D which is a digital PCR system for the reading of low-frequency gene alteration, and Genetron S5 which is a next-generation sequencing (NGS) platform. The company’s key products in the pipeline include lung cancer 8-gene tissue-based testing assay, liquid biopsy-based ctDNA lung cancer assay, liver cancer early screening assay, and high throughput OEM NGS platform (Genetron S2000). Although the company is trying to sell its expertise on data-driven liquid biopsy (vs tissue biopsy) for tumor profiling and early screening, we think the company has yet to prove its expertise outside the area of brain tumor. The company’s revenue is mainly derived from the LDT (laboratory-developed tests) that is conducted by Genetron’s own labs whereas the company hopes to sell its assays and systems to hospitals. Compared to other major indications in China, gene testing assays for brain tumors is a very niche market with a small incident of only 5-8 per 100,000 people that will not be able to justify the company’s valuation. For other major indications, there are competitors who have already received NMPA approval for their gene testing assays for clinical use. We also examine the company’s management and investors. We are of the view that the quality of the company’s management and its investors is just OK. Reading the prospectus leaves a number of questions to ask the company’s management during the deal marketing.

Genetron, a China-based precision oncology company, plans to raise up to USD 100 million to list in the US. Genetron was founded by Dr Yan, a leading academic researcher in the field of glioblastoma (GBM, one type of brain cancer). Dr Yan’s experienced helped the development of IDH1/TERT gene assay for the GBM indication dramatically due to the vast amount of data accumulated during Dr Yan’s work. In addition to the IDH1/TERT assay which was approved by the NMPA in 2017, the company also has two gene sequencing instruments approved by the NMPA, namely Genetron 3D which is a digital PCR system for the reading of low-frequency gene alteration, and Genetron S5 which is a next-generation sequencing (NGS) platform. The company’s key products in the pipeline include lung cancer 8-gene tissue-based testing assay, liquid biopsy-based ctDNA lung cancer assay, liver cancer early screening assay, and high throughput OEM NGS platform (Genetron S2000). Although the company is trying to sell its expertise on data-driven liquid biopsy (vs tissue biopsy) for tumor profiling and early screening, we think the company has yet to prove its expertise outside the area of brain tumor. The company’s revenue is mainly derived from the LDT (laboratory-developed tests) that is conducted by Genetron’s own labs whereas the company hopes to sell its assays and systems to hospitals. Compared to other major indications in China, gene testing assays for brain tumors is a very niche market with a small incident of only 5-8 per 100,000 people that will not be able to justify the company’s valuation. For other major indications, there are competitors who have already received NMPA approval for their gene testing assays for clinical use. We also examine the company’s management and investors. We are of the view that the quality of the company’s management and its investors is just OK. Reading the prospectus leaves a number of questions to ask the company’s management during the deal marketing.

Genetron (泛生子) Pre-IPO: Expertise to Be Proven Outside Brain Tumor

China

Genetron Holdings Limited operates as a biology company. The Company develops treatment for cancer. Genetron Holdings serves customers in China.

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Genetron Holdings Ltd (GTH US)

Burning Rock (燃石医学) Pre-IPO: Leading Precision Oncology Player but Short of Disclosure

Burning Rock, a leading precision oncology player in China, is aiming to raise USD 100 million via a listing in the US. The company is the number...

Ke Yan, CFA, FRM

Genetron (泛生子) Pre-IPO: Expertise to Be Proven Outside Brain Tumor

Genetron, a China-based precision oncology company, plans to raise up to USD 100 million to list in the US. Genetron was founded by Dr Yan, a...

Ke Yan, CFA, FRM

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