Burning Rock rose 50% on the first day of listing: the market value is 2.5 billion US dollars, and VC/PE gathers behind it

“China’s first tumor NGS stock” was born.

On the evening of June 12, Beijing time, Burning Rock Medicine, a domestic tumor genetic testing company, was successfully listed on Nasdaq with the stock code BNR. The issue price was US$16.5, and the opening transaction rose by more than 40%. As of the close, it rose 49.27% ​​to US$24.63. The current market value exceeds US$2.5 billion.

Burning Rock rose 50% on the first day of listing: the market value is 2.5 billion US dollars, and VC/PE gathers behind it

Using genetic testing to make patients more likely to cure diseases, Han Yusheng, founder of Burning Rock Medicine, has spent six years leading the company to stand side by side with international giants. With the ringing of the bell, Pandora’s Box in the field of early cancer detection slowly opened.

Behind it, the lineup of VC/PE investors who have accompanied it for many years is also very luxurious. Before Burning Rock’s IPO, it had raised a total of US$240 million, attracting Northern Lights Ventures, Sequoia Capital China, CMB International, Legend Star, Jifeng Capital, Eli Lilly Asia, GIC, Taihe Capital and other well-known investors.

Obtained “China’s first NGS certificate”

The record of super entrepreneur

In May 2013, the internationally renowned movie star Angelina Jolie announced that she would remove the breast after finding a high risk of breast cancer through genetic testing. This technology instantly attracted worldwide attention. Almost at the same time, a start-up company on the other side of the ocean was brewing, and the leader was Han Yusheng.

Han Yusheng graduated from Union Medical College in 2003 and gave up his direct doctoral degree and chose to pursue a career in business. Two years later, he joined BioTek, an American biotech company, to build a team in China and increase the company’s sales in China by 20 times in four years. After a successful career, he went to Columbia University to study for an MBA, and then returned to China to join Northern Light Venture Capital, focusing on innovative drugs and NGS track investment.

During his tenure at Northern Lights, Han Yusheng smelled the arrival of the big data of tumor genomes in China. Precision medicine is the general trend of clinical tumor treatment in the future, but he has been unable to find a suitable investment target. So, he turned his head to found Burning Stone Medicine, rolled up his sleeves and did it himself.

At that time, the competition for NIPT (non-invasive prenatal testing) had become a red sea. Han Yusheng decisively chose the field of tumor gene testing, focusing on providing clinically valuable NGS services for tumor precision medicine. This judgment was later confirmed.

For different cancer types and clinical scenarios, Burning Rock Medicine has developed 32 detection products, which have gradually been recognized by clinicians. According to the CIC report, Burning Rock’s market share in China’s oncology NGS field in 2019 led the industry – 26.7% of patients who chose cancer treatment drugs based on NGS testing chose Burning Rock, and the proportion of lung cancer patients was as high as 31%. %.

Burning Rock rose 50% on the first day of listing: the market value is 2.5 billion US dollars, and VC/PE gathers behind it

Burning Rock’s core oncology companion diagnostic products

In addition to its strong R&D strength, Burning Rock’s two-pronged business model of “central laboratory + in-hospital testing” is relatively rare. As of March 2020, Burning Rock has implemented NGS testing in 44 of the country’s top hospital testing departments, and its in-hospital business has shown a trend of high growth and has gained a market share of 79.9%.

Undoubtedly, entering the hospital in compliance gives Burning Rock a unique advantage in the fierce market competition. In 2018, Burning Rock obtained China’s “First Certificate of Oncology NGS Kit” issued by the State Drug Administration, and became famous for a while. This means that Burning Rock is the first to get a certificate and enter the top three hospitals faster than its peers, seizing the market, and setting a very high threshold for peers who want to compete in the in-hospital testing market.

Last year’s revenue was nearly 400 million, half of which was engaged in R&D

Grab the next 200 billion “gold mine”

In fact, Burning Rock’s business is not only limited to the detection of tumor patients, but its ambitions in the field of early cancer detection are even greater.

In recent years, tumor genetic testing has been regarded by the capital circle as “the next gold mine”. The CIC industry report predicts that the total potential market for early cancer detection in China will exceed RMB 200 billion by 2030. The domestic genetic testing industry is in its infancy as a whole, and the market potential of tumor genetic testing is far from being released.

As the first echelon player in the domestic NGS tumor detection industry, Burning Rock Medicine launched China’s first prospective pan-cancer early detection study “PREDICT” with over 10,000 people on May 7, 2020. It is understood that the PREDICT study is expected to include more than 14,000 subjects, and the research and development investment will reach 180 million yuan.

Up to now, Burning Rock Medicine has cooperated with many top clinical research institutions in China, and has carried out nearly 20 studies related to early detection in 9 major cancer types. Tissue and blood samples established a model for early detection of cancer. Its early data released in January this year were eye-catching: under the setting of 95% specificity in healthy subjects, the cfDNA methylation early detection model was independently validated in liver cancer patients, colorectal cancer patients and lung cancer patients. Sensitivity of 90%, 89% and 66% was achieved.

In addition, the construction of genomic big data ecosystem is also one of Burning Rock’s main businesses. Burning Rock has established OncoDB, one of the largest cancer genome information databases in China. Based on OncoDB, Burning Rock launched a cloud-based cancer genome data ecosystem LAVA in 2019, which can analyze data through real-time visualization and promote data exchange in the industry, especially among doctors. More than 420 doctors from 120 hospitals have joined LAVA.

Since its establishment 6 years ago, Burning Rock has begun to enter the track of rapid development. According to the prospectus, the total revenue of Burning Rock Medicine in 2017, 2018 and 2019 was 111.2 million, 208.9 million and 381.7 million respectively, corresponding to a year-on-year increase of 87.9% in 2018 and 2019. 82.7%. In 2019, the gross profit reached 273 million yuan, with a gross profit margin of 71.6%.

However, dabbling in many businesses, Burning Rock invests generously in research and development. In 2018 and 2019, Burning Rock’s R&D investment was RMB 105 million and RMB 157 million respectively, accounting for 50% and 41% of the year’s operating income, accounting for the largest proportion of various expenses. The company is not yet profitable, with a loss of 169 million yuan in 2019, but the loss rate is improving.

Northern Lights is the largest institutional shareholder,

Sequoia and Lenovo Star added three times

In the six years since its establishment, Burning Rock has raised a total of US$240 million. Behind the IPO, a number of well-known VC/PE are lurking, accompanying and supporting its development and growth all the way.

In 2014, Burning Rock received 43 million yuan of A-round investment from Northern Lights Venture Capital and Lenovo Star; 150 million yuan of A+ round investment from Jifeng Capital, Sequoia China and Lenovo Star in 2015; Sequoia China led the investment, and Jifeng Capital, CMB International, and Lenovo Star also participated in the 300 million Series B financing. In February 2019, the 850 million C round of financing led by GIC (Singapore Government Investment Corporation) was completed, and Jifeng Capital, CMB International, Lilly Asia Fund, Sequoia China, and Taihe Capital were also invested VC “darling”.

Before Burning Rock’s IPO, the shareholding ratios of several investors were: Northern Lights Ventures held 13.7%, Sequoia Capital China Fund held 9.1%, CMB International held 8.8%, Jifeng Capital holds 7.9%, Lenovo Star holds 6.1%, and GIC holds 6.1%.

In addition, Burning Rock issued 13.5 million American depositary shares (ADS) in this IPO, and Clear Pool Capital subscribed for a cornerstone investment of US$25 million. Existing shareholders including OrbiMed, Casdin Capital, Jifeng Capital, Eli Lilly Asia Fund, CMB International, and Sequoia China subscribed for a combined $79 million of ADS at the IPO price.

As early as the beginning of the company’s establishment, Northern Lights Ventures led the first round of financing for Burning Rock Medicine, and has a deep relationship with the company.

According to Deng Feng, founder and managing director of Northern Lights Ventures, Northern Lights has been paying attention to gene sequencing since 2012, and predicts that a huge application market will emerge in this field. In 2013, Northern Lights paid great attention to tumor NGS. Han Yusheng, then an investor of Northern Lights, did a lot of research and project screening on the industry, but he did not find the ideal investment target in his mind, so he decided to start his own business. Based on the understanding of the founder’s ability and trust in the character, and a clear judgment on the direction of the big industry, Northern Lights has become an angel investor of Burning Rock.

“It turns out that the founding team’s forward-looking vision for the industry, undivided attention to entrepreneurship, and determination to achieve goals have become the DNA of Burning Rock’s rapid growth. The team has not only achieved commercial success, but also created value for the society.” Deng Feng said.

Sequoia China has invested in Burning Rock Medicine since the A+ round, and has continued to support it in every round since then. The successful listing of Burning Rock has also become a typical case of Sequoia China, which has always been based on the early stage and adhered to the “full chain, full cycle and full stage” investment strategy.

Yang Yunxia, ​​Managing Director of Sequoia Capital China Fund, said: “Sequoia China has always been optimistic about and deeply deployed in the field of genetics. As one of the important shareholders of Burning Rock, we have accompanied it all the way to build technological research advantages and a complete high-quality product line. It has grown into a leading company in the field of tumor diagnosis. It is believed that under the leadership of founder and CEO Han Yusheng and the management team, Burning Rock will continue to develop innovative products in the future, so that high-quality NGS testing can benefit more tumor patients. Create greater social value.”

From the perspective of corporate management and investors, Burning Rock is still in the early stages of corporate development, and listing is only a small step in the process, but it is a big step for Chinese oncology NGS companies to go global.

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