Biotech group looks West for future growth opportunities

Manchester biotech group Yourgene Health is focusing on growth opportunities in the US healthcare sector, after a year of investment and consolidation.

The provider of COVID-19 and non-invasive pre-natal testing (NIPT) products for Down’s syndrome and other genetic disorders, reported annual figures yesterday (August 11) which revealed a 10% uplift in revenues, of £18.288m.

The results were well received by analysts, with one, Chris Glasper at Singer Capital Markets, predicting a doubling of turnover by 2024. In 2020 Yourgene revenues were £16.6m and he foresees sales rising to £32.4m by 2024.

Yourgene also revealed yesterday that it had achieved its best first quarter performance in the current financial year, with an 80% increase in revenues of more than £6m.

Chief executive, Lyn Rees, admitted his pleasure at the results in tough trading conditions affected by the pandemic lockdowns.

He told TheBusinessDesk.com: “It was a tough year last year, so being able to deliver any kind of growth, especially double digit growth, was an important achievement. I think what’s more pleasing from last year was we were able to be very proactive, still, as an organisation and make sure that we continue to invest in the business.

“A lot of businesses withdrew results or guidance and spoke about uncertainties in the market. Well, we faced a lot of challenges and continued to invest hard, which has really put us in a good position for the start of this year and hopefully will continue into this year.”

Yourgene has split the business into two key areas of services and technologies. The technology side embraces NIPT and COVID-19 testing, which represented 52% and eight per cent, respectively, of all sales.

Services includes running NIPT and COVID-19 tests in the group’s own laboratories, with COVID-19 accounting for 40% of capacity and NIPT 26%, while the rest involved the group’s other pharmaceutical relationships. Mr Rees said: “We have got quite a broad portfolio of services and products. There’s quite good diversification in our product mix. We’re certainly seeing that diversification coming through in the sales mix now.”

He admitted that the potential the group saw in COVID-19 testing failed to materialise in its annual results, but he sees huge opportunities in the current fiscal year following investment in products and systems: “Last year we saw great potential, with COVID, we reported some numbers but that potential didn’t come through so we’re being more conservative with our approach to COVID numbers.

“But I can tell you that we had a great first quarter – 80% up year-on-year, our best ever quarter start to the year.”

He added: “It’s my third anniversary with the business and the year I joined the organisation we had just done £6m of revenue across the year, so to deliver that in one quarter, we’re very, very pleased.”

Within the first quarter of the current financial year Yourgene saw a big June for COVID. Mr Rees added: “We have seen a big July, we’re expecting a big August and I think that market will continue in September.”

He said PCR testing has been established as the gold standard testing for anyone wanting to leave the country or return to the country, go back to the office, visit a sporting event or a gig, which Mr Rees said offers great opportunities: “We’re in a unique position because the test we use for COVID is our own test, so we manage our own supply chain – we don’t get the challenges that the rest of the market has.

“We’re using products that we manufacture ourselves. We run that diagnostics system in our own labs using our own machinery and if we get a positive result we can sequence that within our own sequencing capability.

“So the plan would be that we get through the next couple of months – we have got some great partnerships out there with the likes of Boots, we’re in multiple airports, we’re in multiple consumer-facing organisations and on top of that we made some big investments in the business towards the end of the last quarter.”

The group was successful in all four lots of Government framework contracts put out for COVID, and is currently in ongoing discussions over four tender opportunities with the Government which should result in additional COVID testing business.

Mr Rees said: “We’re expecting a busy summer with COVID testing. I will be updating the market in September at our AGM with some direction of travel and progress there as we bank the numbers rather than guess what they could be.”

But, going forward, he sees great potential in the North American market which Yourgene is now focusing on. It has established a base in Vancouver following its acquisition a year ago of sample preparation technology company, Coastal Genomics following a £16.5m share placing.

Mr Rees said: “We had some big open spaces in what I call the white space markets and the US was one of them. We had done a couple of hundred thousand dollars-worth of revenue in the US last year, nothing prior to that.

“The US is the biggest global healthcare market in terms of value so it’s really important to break into that market.”

He said Yourgene had to ensure it had the right set of products before entering North America, which it achieved with the launch of its new NIPT test on the Illumina platform.

The next stage was to build a team in the market, especially for COVID-19, so a senior commercial expert was recruited four months ago.

Mr Rees said: “He has made an immediate difference in terms of the traction and the speed that we’re converting deals.”

He said Coastal Genomics allows the business to do more DNA tests more quickly and more cheaply, which he stressed is very relevant to current market growth: “We have signed up four contracts in the US in the last couple of months with two very large US labs, one large US hospital and one very large US genetic testing laboratory, so we are starting to get traction now in terms of customer momentum.”

He added: “There’s a lot of investment gone into that space. We have been leveraging our headquarters in Vancouver to provide products and distribution channels to house our tech services and tech support teams and we have also made a big investment in that facility to give us extra capacity for the manufacture of re-agents, so we’re very excited about the US prospects, for sure.”