Berry Gene released a semi-annual report: strive to upgrade the upstream model, and three generations of sequencing to open a new situation

Source of this article: Entrepreneurial Circle Author: Yu Kun

Wen | Yu Kun

On the evening of August 29, Berry Gene (000710) released its 2021 semi-annual report, with operating income of 734 million yuan and net profit attributable to shareholders of listed companies of 31.23 million yuan. While strengthening the main business, the company is also actively transforming its model, looking for new growth points, and upgrading its strategic planning for the future: becoming a gene technology company that "focuses on clinical commercialization conversion, forward-moving services and product ports, and promoting the development of health big data".

The main business is strong: the three-child policy brings opportunities

It can be seen from the semi-annual report that medical testing services account for 36.15% of the company's revenue, and the main business is clear. Especially in the field of reproductive health testing, the company started earlier in China, the first-mover advantage was able to take the lead in occupying the track, becoming one of the leaders of domestic NIPT (non-invasive prenatal genetic testing), and has now laid out the three-level prevention of pre-pregnancy, pregnancy and newborn. So far, Berry Gene has provided more than 5 million genetic testing services, reducing the economic burden of tens of billions of yuan for society and families.

In terms of secondary prevention and good defense during pregnancy, Berry Gene has widely served the clinic with many core products, including "Bebian" for the detection of 3 common fetal chromosomal diseases, "Bebian Plus" for screening 100 chromosomal diseases and genomic diseases, and "Konoan" chromosome copy number mutation detection in the field of prenatal diagnosis and flow product genetics etiology detection.

The recent implementation of the three-child policy has provided new development opportunities for Berry Gene to deepen its main business. With the encouragement of policies and the increase in the number of births, NIPT will usher in market expansion and potential demand. Berry Gene said in the semi-annual report that the introduction of national policies will create development opportunities for the company, such as the recent central bank's voice on fertility problems, which can stimulate the market demand for prenatal testing products, and the company will actively enjoy the policy dividend of encouraging fertility by virtue of its first-mover advantage and technical advantages, driving the performance of medical products and services.

Strive for the upstream: active transformation to enhance competitiveness

There are several notable figures in this semi-annual report. Among them, equipment sales accounted for 7.04% of the total revenue, achieving explosive growth, with a year-on-year growth rate of 273.90%.

Berry Gene mentioned in the semi-annual report that during the reporting period, the company's reagent and equipment sales operating income and operating costs have increased compared with the same period last year, mainly due to the gradual improvement of consumers and medical institutions' acceptance of genetic testing, the continuous improvement of business penetration, more and more medical institutions choose to conduct sample testing independently, and the company's business model has gradually changed from service model to product model, that is, gradually from "genetic testing service" to upstream "equipment and reagent sales".

In terms of equipment sales, the NextSeq CN500 gene sequencer was jointly developed by Berry Gene and Illumina specifically for chinese clinical use. In June 2019, the change in the scope of application of NextSeq CN500 was approved by the State Drug Administration, which is no longer limited to NIPT testing, and has successfully entered more fields such as tumors and genetic diseases, becoming a universal NGS platform suitable for large-scale clinical genetic testing. Since its listing, NextSeq CN500 has entered more than 200 qualified medical institutions and third-party testing institutions.

During the reporting period, equipment sales increased significantly year-on-year, confirming the technical level of the company's equipment products and the ability to develop channels. Combined with the company's "forward service and product port" planning, it is not difficult to see its determination to create core technology products, enhance competitiveness, expand profit points, and actively transform and upgrade upstream.

Pioneering a new bureau: accelerating the landing of three generations of sequencing products

While the main business is stable and the model is upgraded, Berry Gene is also looking for new growth points. At the recent media open day, the company announced the latest achievements in the clinical transformation of third-generation gene sequencing technology (referred to as third-generation sequencing), and introduced the comprehensively upgraded third-generation geo-poverty (using third-generation gene sequencing technology for screening carriers with thalassemia).

According to the semi-annual report, thalassemia carrier screening is an important measure to control the birth of children with medium and severe poverty, the company innovatively applied the third generation of sequencing technology to the screening of poor carriers, so that the efficiency and accuracy of screening are comprehensively improved, the reading length of the third generation of sequencing technology is more than 100 times that of NGS, and has many advantages in clinical application, whether it is to improve the prevention and control efficiency of severe poverty, to avoid unnecessary prenatal diagnosis caused by false screening, clinical precision genetic counseling, etc. Three generations of land poverty have irreplaceable advantages.

In 2019, Berry Gene announced a long-term cooperation with Pacific Biosciences, the world's leading third-generation sequencer R&D and manufacturing company, to jointly develop a genetic testing platform based on PacBio SMRT® sequencing technology, and today, Berry Gene is the world's largest partner of Pacific Biosciences. In July 2021, a multi-center clinical prospective study of three generations of ground poverty confirmed that its detection accuracy was 100%; from January to June this year, Berry Gene launched the Thalassemia Gene Atlas (TiGA) program, confirming that compared with traditional sequencing technology, three generations of poor can still increase the genetic diagnosis rate of rare α and β poor by about 40% and 60%, respectively.

At present, Berry Gene has landed three generations of local poor carrier screening, newborn screening and comprehensive diagnosis of three products, three generations of CAH (congenital adrenal hyperplasia) new products are also about to be launched. It is understood that the third generation of products is still operating in the mode of LLT (Clinical Laboratory Self-built Project). In the long run, the product should follow the IVD (in vitro diagnosis) model, replicate the successful experience of NIPT, and create new momentum for the company's development.