Yourgene agrees sale of Taiwan lab for up to £3.2m
Manchester-based medical research group, Yourgene Health, has agreed the conditional divestment of its Taiwanese subsidiary, for approximately £3.2m.
Yourgene Health Taiwan Co is being sold to INEX Innovate Pte, a Singapore-based molecular diagnostics company focused on women’s and fetal health.
As announced on April 26, 2022, given the challenges supporting, investing and growing the Taiwanese genomic service lab from the UK, the Yourgene board decided to conduct an operational and strategic review of its Taiwanese operations.
As a result of this review the board decided to seek an acquirer for the group’s Taiwan-based business activities, while retaining ownership of its proprietary NIPT (non-invasive pre-natal testing) software, SageTM Prenatal Screening, which underpins its wider NIPT offerings in Asia-Pacific and elsewhere.
The divestment is conditional on the acquirer being granted Taiwanese Government approval for the planned acquisition as required for non-Taiwanese acquirers. Yourgene will also need to complete a pre-closing restructure to facilitate the transfer of retained people and assets to other group companies. It is currently expected that these conditions will be satisfied within the next three months and that the closing date will occur before September 2023.
The divestment will streamline the group’s operations, enabling Yourgene to focus its strategic efforts on expanding the core Asia-Pacific product-based activities while retaining a strong route to market in Taiwan and reduce the group’s ongoing expenditure by approximately £0.5m on an annualised basis.
For the year ended March 31, 2023, on a post-restructure pro forma basis, Yourgene Health Taiwan had turnover of circa £2m and was profit breakeven. The proceeds from the divestment will be used for general working capital purposes in the Asia-Pacific region and in the pursuit of the group’s strategic objectives.
The terms of the sale include upfront payment: $1m payable on the closing date, plus $1m payable as a lump sum or via ad hoc instalments within two years of the closing date – carrying interest at seven per cent. above the Bank of England base rate – plus up to $2m potential earnout subject to the achievement of certain profit-related milestones over the next two calendar years post completion.
The loan agreement is secured against the shares of the subsidiary being sold such that failure to pay will result in ownership returning to Yourgene with no obligation to return previously received funds.
On the closing date, INEX will be appointed as Yourgene’s NIPT distributor in Taiwan and Japan and will act as the group’s exclusive laboratory partner and service provider in Asia for an initial three-year term.
INEX will also apply its expertise in diagnostic testing in South East Asia to grow the laboratory services business in its own fields of activity. There will be a transitional period of 12 months where the two companies will support each other operationally and administratively while separation of the two businesses takes place in an orderly manner.
Yourgene’s board member and Yourgene Health Taiwan’s founder, Dr Bill Chang, will remain with the group and on the board of directors. As part of the pre-closing restructure, ownership of two non-trading subsidiaries of Yourgene Health Taiwan will be transferred to Dr Chang while their dissolution takes place, so as to remove a potential delaying factor from the acquisition.
The disposal of the Yourgene Health’s Taiwan laboratory completes another step in Yourgene’s multi-stage strategic plan which is intended to create focus on the group’s core products and geographies, prolong the available cash runway and rebuild shareholder value over time.
Chief executive, Lyn Rees, said: “We look forward to developing a lasting relationship with INEX as they act as our exclusive laboratory partner and service provider across Asia. We will update shareholders once the completion of the transaction has occurred in due course.”
