Fulgent Genetics, Inc. a technology-based genetic testing company focused on transforming patient care in oncology, infectious and rare diseases, and reproductive health, announced that it has completed an acquisition of Fulgent Pharma Holdings, Inc. (“Fulgent Pharma”), an independent clinical-stage, therapeutics development company focused on the development of innovative cancer treatments. Under the terms of the agreement, Fulgent Genetics acquired Fulgent Pharma for a total purchase price of approximately $100 million, subject to adjustments, to be paid with a combination of cash on hand and shares of common stock of Fulgent Genetics.
The combined company plans to offer a vertically integrated solution to combat cancer with the potential to unlock significant long-term upside for both the therapeutic and diagnostic businesses, while effectively managing risk. Fulgent Pharma and Fulgent Genetics were previously both owned by Fulgent Therapeutics until 2016, when the businesses were separated ahead of the Initial Public Offering of Fulgent Genetics. The companies have operated as separate entities since 2016, enabling each business to focus on and achieve core objectives across genetic testing and therapeutic drug development. Over the last year, Fulgent Genetics has established a meaningful presence in the large market for molecular diagnostics and oncologic testing, most notably with the recent acquisitions of CSI Laboratories and Inform Diagnostics, and the opening of a state-of-the-art oncologic testing facility in southern California. Fulgent Pharma has developed a novel nanoencapsulation and targeted therapy platform, which is designed to improve the therapeutic window and pharmacokinetic profile of new and existing cancer drugs. Based on current studies and pre-designated criteria, Fulgent Pharma believes its lead drug candidate, FID-007, has achieved proof-of-concept in preliminary human clinical trials for the treatment of various cancer types, including Head and Neck, Ampullary, Pancreatic, NSCLC, and Breast.
“This acquisition advances our mission to build a holistic platform to provide comprehensive solutions and services across the cancer care continuum, including early detection, diagnostics, and monitoring, as well as drug discovery and development,” said Ming Hsieh, Chairman and CEO of Fulgent Genetics and co-founder of Fulgent Therapeutics. “With my commitment and our teams already in place, the combination of these two businesses diversifies our assets and will, we believe, provide sustainable future revenue and margin opportunity through a potentially lucrative target oncology market.”
“In addition to FID-007, our proprietary nano-drug delivery platform has generated a deep pipeline of wholly owned drug candidates, focused on additional target cancer indications, including one for colon cancer and one NCE (new chemical entity) targeting the STING pathway. Both have been tested extensively in preclinical studies,” said Ray Yin, PhD., President and Chief Scientific Officer of Fulgent Pharma and co-founder of Fulgent Therapeutics. “Through this acquisition, Fulgent Pharma will have access to commercial relationships across the oncology market as well as capital to fund research, development and, assuming the requisite regulatory approvals, commercialization as part of Fulgent Genetics.”
Strategic Vision
- Attractive Lead Therapeutic Candidate FID-007 and Nanoencapsulation Technology: Fulgent Pharma’s lead program, FID-007, is a proprietary nanoencapsulated formulation of paclitaxel developed to improve the overall solubility profile of paclitaxel. Data observed from studies conducted to date suggest that nanoencapsulation of paclitaxel may improve the biodistribution and bioavailability to target tissues. Such data also demonstrate a favorable profile and further support potential applications in a broad range of indications including Head and Neck, Ampullary, Pancreatic, Lung, Breast, and Ovarian cancers.
- Expanded Market Opportunity: FID-007 is currently being developed for 2nd and 3rd line treatment of Head & Neck (H&N) cancer, a potential $2.2+ billion target market opportunity. The company sees further opportunities in large multi-billion markets including NSCLC, Pancreatic, Breast, and Ovarian cancers where currently available therapies are suboptimal.
- Strategic and Operational Synergies: Potential long-term value creation driven by the combination of therapeutic candidates and diagnostics expertise, designed to offer a comprehensive oncology-focused solution that enables precision medicine through in-house or partnered therapeutics programs underpinned by genetic data insights. In addition, Fulgent Pharma’s talented scientific team brings unique expertise to the combined businesses and creates a differentiated advantage in the oncology market.
- Enhanced Commercial Profile: Following completion of development and regulatory approval, the combined company is positioned to be a “one-stop shop” that spans the life sciences chain and reaches the expanded customer base of Fulgent Genetics through its growing sales organization.
- Attractive Capital Allocation Plan: Fulgent Genetics’ strong balance sheet and cash flows from operations are expected to be able to support the advancement of Fulgent Pharma’s R&D pipeline. Fulgent Genetics’ track record of integrating acquisitions, strategic partnerships, and disciplined execution has been a key element in the company’s growth. This acquisition is designed to align with Fulgent Genetics’ strategy to drive long term shareholder value through organic and inorganic initiatives across the genomics and, assuming the requisite regulatory approvals, therapeutics market segments.