Fulgent Makes Post-Covid Acquisition – Los Angeles Business Journal

Temple City-based Fulgent Genetics Inc., which rode the Covid-testing wave to become a billion-dollar company, now has a new post-Covid strategy and it’s a hefty dose back to the future. Fulgent Genetics announced on November 7 that it is acquiring Fulgent Pharma, a former subsidiary, for $100 million to begin its transformation into a vertically integrated cancer diagnosis and treatment company.

Six years ago, Fulgent Pharma and Fulgent Genetics were both part of a company called Fulgent Therapeutics, co-founded in 2011 by then-billionaire Ming Hsieh with proceeds from his $940 million sale of biometric security company Cogent to IBM the previous year. But in 2016, Fulgent Therapeutics jettisoned its drug development unit when it went public with the genetic testing portion of its business and adopted the Fulgent Genetics name.

Fulgent Pharma has since been run as a private cancer therapeutics company by Hsieh and Ray Yin, co-founders of Fulgent Therapeutics. The company has developed a targeted cancer therapy drug platform to improve the treatment window for certain cancer drugs.

Fulgent Genetics, meanwhile, has had a wild ride. Until 2019 it was a small genetic testing company. That year, the company, with then-$32 million in annual sales, launched a home genetic testing business that it hoped would lead to steady growth. But then the pandemic hit, and Fulgent Genetics turned to Covid testing in a big way, snapping up several huge public sector contracts. By the end of last year, Fulgent had grown into a $1 billion company with a sizeable nationwide laboratory network.

But this year, Fulgent Genetics’ Covid testing volume has dropped significantly; The company has tried to diversify, but investors have been cautious, dropping the stock nearly 60% to the mid-$30s. Fulgent Genetics made two significant cancer diagnostics acquisitions: CSI Laboratories in August of last year for an undisclosed sum of more than $50 million; and pathology laboratory company Inform Diagnostics for $170 million last April.

With the acquisition of Fulgent Pharma, Fulgent Genetics’ post-Covid strategy has now become much clearer.

“We believe this acquisition has the potential to rapidly transform Fulgent Genetics from a gene diagnostics services company into a fully integrated precision medicine company focused on oncology,” Hsieh said in a conference call.

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