Fresh from raising £16m last month to embark upon the exciting next phase of its growth, Yourgene Health (YGEN) is now looking to seriously step-up its global markets penetration as part of a comprehensive and multi-faceted growth strategy.
With the share price of YGEN increasing by 130% since lock down, investors are sitting up and taking note of the prospects for the international molecular genetics group with a diversified offering that includes prenatal screening, oncology and COVID-19 testing.
Find out why Yourgene Health CEO and industry expert Lyn Rees is supremely confident of strong and sustainable growth in addition to how he’d pitch the business to legendary investor Warren Buffett!
Firstly, please could you tell us a bit about your YGEN and its value proposition?
Yourgene Health plc (AIM: YGEN) is an international molecular diagnostics group which develops and commercialises genetic products and services in over 60 territories. The Group operates in three product segments: non-invasive prenatal testing (NIPT), reproductive health and molecular genetics.
The CE marked IONA® test and the SAGETM prenatal screening services are Yourgene’s leading product family, a suite of NIPT solutions for Down’s syndrome and other genetic disorders. With just a small sample of blood, Yourgene’s NIPT tests can pick up genetic abnormalities within the fetus as early as 10 weeks. The current method, a combined test, is only 85% specific, compared with Yourgene’s IONA® test at >99% and is taken at 10-13 weeks. This means more women will receive safe, fast and accurate information about their pregnancy.
The current climate is presenting challenge and opportunity – how has this applied to YGEN?
Yourgene has supported the COVID-19 efforts by recently expanding its laboratory capabilities to offer a COVID-19 testing service, developing its own COVID-19 test kit, the Clarigene™ SARS-CoV-2 test, a molecular PCR based COVID-19 assay, which is able to detect whether individuals are currently infected. In August 2020, the Company announced that it had received CE-IVD marking for its Clarigene™ SARS-CoV-2 in vitro diagnostic kit, for diagnostic use. Clinical validation of the test has shown >99.9% accuracy with no false positive or false negative results. Yourgene’s COVID-19 testing service will support private testing demand where there are defined testing populations such as UK GP surgeries, private clinics and other corporate clients, helping to get Britain back to work safely.
The Company also successfully raised £16m in August 2020 via a placing with both new and existing shareholders, supporting and enhancing the organic and inorganic growth delivered by Yourgene. The proceeds were used to further accelerate its commercial global footprint, to manage the launch of the IONA® Nx NIPT Workflow across existing and new regions, provide more opportunity to expand Yourgene’s COVID-19 testing capacity, in line with future demand profiles, accelerate its internal R&D pipeline to support its planned and growing product portfolio and to accelerate its M&A pipeline.
Growth catalysts are crucial to business growth – what do you believe yours are?
Yourgene has seen success from both organic and inorganic growth and has executed its growth strategy by prioritising four key areas:
- Product penetration
- Geographic penetration
- Product expansion
- Acquisition growth
The Company has been successful at bringing new products to market over the last 12 months, illustrating the strength of its R&D capabilities.
The Company has grown inorganically by making strategic acquisitions helping build global distribution channels and expanding its product portfolio. In August 2020, an oversubscribed Placing raised gross proceeds of £16.15m to enhance the Company’s growth trajectory, through the acquisition of Coastal Genomics, Inc., a sample preparation technology company based in Vancouver, Canada. The acquisition has created many commercial synergies, allowing Yourgene to increase its geographical penetration in the US and Canada, accelerating its diversification into the oncology market and providing access to the DNA sample preparation market.
In April 2019 Yourgene Health acquired Elucigene Diagnostics, a leading molecular diagnostics manufacturer and developer focused on reproductive health and oncology. Following this, in September 2019 Yourgene launched its first oncology product, Elucigene DPYD assay, a simple-to-use genotyping test that can identify cancer patients with Dihydropyrimidine Dehydrogenase (DPD) deficiency, which can cause severe and sometimes lethal side effects in patients being treated with chemotherapeutic drug 5-Fluorouracil.
In March 2020, Yourgene also acquired the Company’s current French distribution partner for its IONA® test, AGX-DPNI S.A.S., from which the Company estimates an immediate EBITDA uplift in first year of c.£0.5m from internalising distributor margins. France is a key growth market for NIPT with 75% growth in Yourgene NIPT volume sales in 2019.
What are the biggest headwinds you foresee to achieving growth in the coming months and years? How will you tackle them?
Yourgene continue to make good progress in expanding its commercial footprint into new territories, and the Company achieved its first US revenues and opening of Yourgene Health Inc in the US this year. Due to restrictions on travel and borders shutting due to COVID-19 this has created additional hurdles in how we can install and provide technical support to our new and existing NIPT labs globally. However, we have overcome this with virtual and remote access and by expanding our local commercial and technical teams across Europe and other regions.
Imagine you find yourself in a lift with Warren Buffett. What would be your ‘elevator pitch’ to summarise why he should invest in your business?
Yourgene is a global business operating in a billion dollar molecular testing market with proprietary DNA analysis technology. The Company operates with blue-chip sector leading industry partners with a host of complementary products. This coupled with a clean balance sheet, strengthened by the recent fundraise, and expansion in the COVID-19 sector, broadening its service product offering illustrates upside in the business. The Group is run by an experienced management team, led by Lyn Rees, CEO, who have a combined shareholding of c.15% and a track record of executing a commercialisation strategy.
Please note: this discussion with Lyn Rees of Yourgene Health forms part of the ShareBuyers’ going for growth series – helping companies with high growth potential to share their growth story. It is not a recommendation to buy or sell shares in YGEN.