Hong Kong biotech start-up Prenetics to checklist in US by means of SPAC deal

Hong Kong biotech company Prenetics is going public through a merger with Artisan Acquisition – a special purpose vehicle for acquisitions, or SPAC – to value the combined company at $ 1.7 billion, the companies announced Thursday.

Confirm CNBC’s previous report, the two companies said the deal is expected to close in the fourth quarter.

This makes Prenetics the first Hong Kong unicorn or multi-billion dollar start-up to become a publicly traded company.

Prenetics CEO Danny Yeung (left) and Artisan Acquisitions founder Adrian Cheng, who is also CEO and Executive Vice Chairman of New World Development. Prenetics goes public through a SPAC merger with Artisan Acquisition that will value the combined company at $ 1.7 billion.

Source: Prenetics

The merged company will trade on the Nasdaq under a new ticker symbol PRE when it closes.

The merger is expected to generate up to $ 459 million in cash revenue that will be used for strategic acquisitions, geographic expansion, and research and development.

Artisan Acquisition is supported by Adrian Cheng, CEO and Executive Vice Chairman of Hong Kong-listed Development of the new world. Prenetics – a diagnostics and genetic testing company in 10 countries – wants to leverage Cheng’s business portfolio that includes retail, hospitality, healthcare and real estate.

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According to Ben Cheng, CEO of Artisan Acquisition, Prenetics was chosen for a number of reasons.

The Hong Kong-based startup is a high-growth company that is revolutionizing the healthcare industry and is led by an established entrepreneur, Cheng told CNBC.Squawk Box Asia” on Thursday.

He was referring to Artisan’s CEO and co-founder, Danny Yeung, who previously worked at Groupon.

“We are very confident about his track record,” said Cheng.

For his part, Yeung told CNBC that using the cash proceeds from the deal for mergers and acquisitions is a top priority for Prenetics.

“The US is a priority market for us, Southeast Asia and the rest of Europe – we will certainly invest in growth, manufacturing, product development and research and development again,” he said on Thursday.

To date, Prenetics has performed more than 5 million Covid-19 tests for customers including the Hong Kong government and London Heathrow Airport.

It counts names like Chinese internet company Alibaba, as well as the insurers Ping An and Prudential as strategic investors.

The company has grown significantly since it was founded in 2014. Revenue is expected to triple year-on-year to $ 205 million in 2021 and to increase to $ 600 million by 2025.

– CNBC’s Saheli Roy Choudhury contributed to this report.

Three Biotech ETFs That Might Double Your Cash by 2025 With Zero Effort

Between the unpredictable twists and turns of the clinical trial process and the endless mysteries of human health, investing in biotech stocks is quite risky. Treatment candidates that appear promising often fail, and most investors lack the science to properly assess the merits of a company’s technology platform or drugs under development.

So, for those looking to benefit from the long-term growth of the biotech industry – which is apparently just beginning – buy Exchange Traded Funds (ETFs) Instead of individual stocks can be a solid strategy. These ETFs own an abundance of stocks across the industry. So while the overwhelming success of one company won’t have a huge impact on your investment returns, the failure of another won’t take much of a bite out of you either.

There are a number of biotech ETF options available to investors, each with their own thematic focus and risk profile, but I prefer these three for one simple, compelling reason: They have historically outperformed the market.

Image source: Getty Images.

1. SPDR S&P Biotech ETF

With a net worth of $ 7.54 billion SPDR S&P Biotech ETF (NYSEMKT: XBI) has been one of the largest in the industry since it was founded in 2006. It holds stakes in emerging stars like Modern as well as clinical-stage competitors such as Humane and Vaxart. Overall, the fund focuses on small-cap biotechs that prepared for massive growth at some point in the future, so don’t expect to find many profitable or established companies on its list.

The SPDR S&P Biotech ETF turns over 66% of its holdings each year, ensuring that investors continue to participate in potential winners and all of their stocks from the S&P Biotechnology Select Industry Index. In terms of cost, it is Expense ratio of 0.35% is lower than the biotech ETF category average of around 0.5%, but not by much. And compared to the S&P 500, the dividend yield of 0.25% is quite low. If you’re looking for broad exposure to the biotech industry, this ETF is one of the best options. However, if you prefer to focus your investments on companies pursuing a particular area of ​​therapy development, it is far too diversified.

2. Global X Genomics and Biotechnology ETF

Founded in April 2019, Global X Genomics and Biotechnology ETF (NASDAQ: GNOM) is on the smaller side of biotech ETFs with net worth just under $ 215.94 million. As the name suggests, investment is focused on companies that can benefit from breakthroughs and new technologies in genomics. Its holdings include profitable gene sequencing giants like lighting as well as biotechs like Intellia therapeutics, an impressive company, even if it does not yet have an approved product on the market. These companies’ stocks are unlikely to double in a day based on good news from a clinical trial, but they are also less likely to collapse under the opposite circumstances.

Because this ETF is a mix of companies with different maturities, the stocks held by this ETF are more mid-caps than small-caps. The 0.5% expense ratio is about average, but that won’t ruin your returns. The lack of a dividend yield is a disadvantage, but the ETF has still beaten the market in its existence to date.

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^ SPX Data from YCharts

3. iShares Genomics, Immunology and Healthcare ETF

The iShares Genomics, Immunology and Healthcare ETF (NYSEMKT: IDNA) invests in companies around the world that could benefit from advances in biotechnology, genomics and immunology. It was founded in June 2019 and holds stocks like Moderna and BioNTech, as well as pharmaceutical giants like Gilead Sciences and Sanofi. Most of his largest holdings are mature companies with at least one source of recurring income. So expect the earnings season to be the most common catalyst for notable stock price movements.

In theory, investors in these ETFs are exposed to a steady growth rate that is less risky than the norm in the biotech industry. With a net worth of $ 290.71 million, it’s a bit smaller and its expense ratio of 0.47% is average. While this ETF’s dividend yield is 0.26% higher than any other I’ve discussed today, it probably shouldn’t be the focus of investors.

One thing that sets this ETF apart from the other two I mentioned is that it has a broader representation of international stocks. As a result, it is less exposed to risks from changes in national regulations on drug development processes or drug pricing, as these risks are typically confined to individual markets.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

With cash pouring into biotech, Versant raises one other $950M

Diving letter:

  • The well-funded venture capital company Versant Ventures said Wednesday It has raised an additional $ 950 million to invest in biotechnology and healthcare companies.
  • The money is divided between three funds. The first has $ 560 million to create 20 or more biotech startups in the US, Canada and Europe. The second has $ 140 million to invest with other firms in the early rounds of fundraising for startups that “have the potential to be breakouts.” And the third has $ 250 million for future fundraisers from companies already in Versant’s portfolio and nearing a liquidity event.
  • Versant’s announcement comes when a record amount of money is poured into biotechnology. In a report also released on Wednesday, KPMG found that US pharmaceutical and biotech companies raised $ 10 billion in venture capital from January to March – this is 38% of all venture capital investments in these sectors last year, according to KPMG .

Dive Insight:

In the 20 years or so since its inception, Versant has grown to be a major player in biopharmaceutical investments. The company supported well-known startups like Audentes Therapeutics, CRISPR Therapeutics and Quanticel Pharmaceuticals early on and has observed that at least 40 of its portfolio companies have either gone public or have been acquired. Just this year, two Versant-funded biotech companies, Five top-class therapeutics and Pandion Therapeuticswere bought for about $ 2 billion each.

Unlike some of his colleagues, Versant has developed a flexible approach to venture capital investing. The company was one of the first to experiment with a “build-to-buy” model, creating startups with the specific goal of being acquired by an agreed buyer.

That was the case with Quanticel. One year after its founding in 2010, cancer-focused biotechnology signed a research and development agreement that gave Celgene an exclusive option to acquire it. By 2015, Celgene decided to exercise its option and bought Quanticel for $ 100 million upfront.

While the “build-to-buy” model is a useful tool in times when it has been difficult to raise money or generate returns on investment, it has since fallen out of favor with biopharmaceutical venture capitalists. In recent years, it has been easy for startups to get hold of cash. Record sums were achieved in both private and public fundraising.

But Versant also uses other strategies. For example, the company has “incubators” in key biotech hubs like San Diego and New York, where employees look for opportunities to do business with academic institutions or start new startups.

Versant’s recent fundraising reflects this diverse approach as the $ 950 million goes into three funds that specialize in different types of investments.

In a statement Wednesday, Versant stated that the $ 560 million fund is being managed by the same team and following the same investment strategy as the company’s previous global biotech funds. The $ 250 million strategic opportunity fund is also similar to its predecessor, according to Versant, and is intended to provide later portfolio opportunities for portfolio companies that are expected to generate returns over the next year.

Regarding the $ 140 million Booster Fund, Versant said its purpose is, in part, to avoid jeopardizing the cash reserves planned for other portfolio companies.

“As we build a portfolio, we inevitably generate a select number of deals that have exceptional potential from the start,” said Brad Bolzon, chairman and general manager of Versant, in the statement of Opportunity beyond our typical Series A investment allocations to additional Access Versant Capital to add momentum. “

Versant said all three funds have exceeded their original targets and are “heavily oversubscribed” and that the money has come from existing investors and a “select number of new top-tier limited partners.”

The increase on Wednesday comes about two and a half years after Versant’s last big win of $ 700 million. The company split that money across two funds: one with $ 600 million would fund 20 or more biotech companies in the United States, Canada, and Europe, while the other would fund $ 100 million among five to eight Canadian-based startup companies would use.

2 Biotech Shares That Might Double Your Cash

Biotech stocks were extremely popular with investors in 2020. Last year the iShares NASDAQ Biotechnology ETF (NASDAQ: IBB), an industry indicator, has compared to the S&P 50014% return over the same period. It is clear that many eyes are on manufacturers of test supplies, drugs and vaccines for the coronavirus.

The extraordinary attention paid to coronavirus stocks has left other highs Biotech out of the spotlight. I think a lot of them are undervalued because of that. Let’s look at why a blue-chip rare disease drug maker and a CRISPR gene therapy developer have the potential to double your money.

Image source: Getty Images.

1st vertex

Vertex Pharmaceuticals (NASDAQ: VRTX) has become a leader in the treatment of cystic fibrosis. This hereditary disease severely restricts the patient’s ability to breathe due to abnormally high levels of viscous fluid in the lungs. Vertex’s triple combination cystic fibrosis therapy, Trikafta, improved patient tidal volume by 14.3% compared to placebo in clinical trials.

While the improvement is arguably small, it did not prevent the drug from becoming very popular in the US and EU. Currently, approximately 50% of the 83,000 cystic fibrosis patients in several developed countries are receiving one of Vertex’s drugs. Vertex also plans to expand Trikafta’s label to treat children and infants with cystic fibrosis. Vertex also has a therapeutic agent in the pipeline for the remaining 10% of patients who need gene therapy to relieve cystic fibrosis.

Thanks to Trikafta, Vertex expects sales and operating income to exceed $ 6 billion and $ 3 billion respectively in 2020. Those numbers are fantastic when you consider that the company had sales of $ 4 billion and operating income of nearly $ 2 billion in 2019.

Despite having 10 times the sales, Vertex is extremely profitable. Because of this result and its impressive growth trajectory, the price-earnings-ratio is 22 easier to swallow. To top it off, Vertex has no debt and more than $ 6 billion in cash on its balance sheet.

2. CRISPR Therapeutics

CRISPR Therapeutics (NASDAQ: CRSP) has already made investors richer with a return of 235% last year. It is currently leveraging its gene editing technology to help patients overcome inherited blood disorders such as sickle cell anemia and beta thalassemia. These cause severe, life-threatening deformities in patients’ red blood cells and occur in over 360,000 newborns worldwide each year.

The company proposes to alleviate the diseases by transfusing genetically engineered stem cells containing fetal hemoglobin into patients and allowing the cells to mature into normal adult hemoglobin. During a preliminary phase 1/2 data release, patients’ hemoglobin levels improved to those of healthy adults between five and 18 months after the transfusion.

Even better, CTX001, the company’s treatment, was well tolerated. The results are early, but downright incredible novel treatments Because sickle cell disease cannot go so far as to normalize the patient’s hemoglobin level.

However, CRISPR Therapeutics is not only interested in curing blood disorders. The know-how in the area of ​​gene editing is also used in the area of ​​allogeneic T-cell therapy for cancer treatment.

In this process, the genetic data of T cells from healthy donors is first programmed to target and kill cancer cells. Thereafter, the improved cells are mass-produced and stored. They are then customized for patients based on their type of cancer mutation.

The technique has much higher efficacy and availability than the more traditional autologous T cell therapy, in which T cells are extracted directly from cancer patients, their components modified, and then transfused back into the patient. The entire procedure can take up to three weeks and only result in a single therapy cycle.

The Company’s most promising therapeutic candidate in this area is CTX110. In a preliminary phase 1 data release, 12 patients with late-stage lymphoma received CTX110 transfusions. Of eight participants who received the higher doses, four of these patients developed complete responses with no serious side effects. A “complete response” is defined as the complete elimination of tumor or cancer activity.

Given that a single novel and effective cancer treatment can be worth over $ 10 billion, there is definitely tremendous potential for the CRISPR Therapeutics pipeline. In addition, the company has approximately $ 1 billion in cash and cash equivalents, which is more than enough to offset its operating cash stake of $ 211.3 million. CRISPR is sure to more than double investor money again as it develops a functional cure or effective genetic treatments in its clinical trials.