Clearbridge's associate Biolidics to raise $7.7 million in all-placement IPO

Trinity Chua
Trinity Chua12/17/2018 07:30 AM GMT+08  • 5 min read
Clearbridge's associate Biolidics to raise $7.7 million in all-placement IPO
SINGAPORE (Dec 17): Clearbridge Health, which has seen its share price lose half its value this year, is spinning off its cancer diagnostics associate Biolidics for a Catalist listing. Biolidics, which has plans to expand in China, is placing out 27.5
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SINGAPORE (Dec 17): Clearbridge Health, which has seen its share price lose half its value this year, is spinning off its cancer diagnostics associate Biolidics for a Catalist listing. Biolidics, which has plans to expand in China, is placing out 27.5 million shares at 28 cents apiece, raising gross proceeds of $7.7 million. Trading is slated to start on Dec 19. Just as Clearbridge was the last IPO of 2017, Biolidics is the last IPO this year. Similar to Clearbridge’s case, there is no public tranche for Biolidics.

The new shares, which represent 11.34% of the company’s enlarged share base, are placed to retail and institutional investors in Singapore, starting from Dec 11 to 17. At the IPO price of 28 cents, Biolidics is valued at $67.9 million. Pro forma net asset value per share would rise from 4.1 cents before placement to 6.1 cents after placement. Clearbridge, its biggest shareholder, will reduce its stake to 24.8%, from 27.97%. Government statutory board Enterprise Singapore, via its Seeds Capital fund, will hold another 10.7% of the company.

“The inaugural spin-off of Biolidics will unlock value for shareholders of Clearbridge Health, while allowing a wider pool of investors to benefit from Biolidics’ immense growth potential. The spin-off is also in line with our strategic focus on the delivery of primary healthcare and the provision of healthcare systems,” says Jeremy Yee, CEO of Clearbridge.

Biolidics, previously known as Clearbridge Biomedics, is a spin-off from the R&D joint venture of the National University of Singapore and the Singapore-MIT Alliance for Research and Technology. It is the first company incubated by Clearbridge’s healthcare and technology accelerator.

The company’s main revenue driver is the ClearCell FX1 System, which can separate circulating tumour cells (CTCs) from 7.5ml of blood under two hours. This allows physicians to detect early-stage cancer, or monitor the effectiveness of treatment on cancer patients over time. ClearCell FX1 has been sold mainly for research purposes.

So far, Biolidics has deployed 80 such systems globally and carried out more than 170 tests in Singapore to detect breast, prostate and lung cancer. The machine has a specificity rate of 95%, according to Clearbridge.

Now, the company is moving closer towards commercialisation with two deals inked with Hunan Agen Medicine Laboratory Technology, and Holistic Integrative Pharmacy Institute, which is part of Hangzhou Normal University.

A big part of the IPO proceeds, some $2.7 million, will be used to expand its cancer diagnostic tool’s clinical applications. Another $2.4 million will be used to grow Biolidics’ pipeline of products. The remaining $1 million will be allocated for working capital purposes. “Today, we are delivering a product, not developing a product. You need financial and salespeople to push the boundaries and bring this overseas,” says Biolidics CEO Ivan Lew, who came on board only in September.

The company has set its sights on China, where it now has two labs that can offer the ClearCell FX System as a service to patients after it validates the technology. “There is no timeline when the validation will be completed. It depends on the number of patients,” says Lew. The Hunan lab serves most hospitals in the province, home to 65 million people. Cancer diagnostic tests typically cost around RMB3,500 ($697) in the province.

While the Chinese healthcare and diagnostics sector is growing the fastest in the world, competition is steep. There are hundreds of cancer diagnostics start-ups in the market, funded by optimistic private investors. Venture capital investment in Chinese healthcare rose from US$1 billion in 2013 to US$11.7 billion ($16 billion) in 2017.

The road ahead will not be easy as Biolidics tries to scale in China. Lew plans to continue to court more labs to use its services. Even then, it would still be some way before Biolidics is able to offer its tests to the lucrative and much larger market of hospitals and clinics, not just labs. The company says there is no fixed timeline for it to complete all the clinical trials required to offer its services to hospitals.

R&D expenses may also go up as the company improves its technology. “There are things we need to improve, say, to be able to do concurrent blood tests or conduct the test in a shorter time frame or improve the biochip [that is required to filter out CTCs],” says Lew, who was previously with several other listed companies such as Stratech Systems and Sembcorp Industries.

Between 2011 and the IPO, Biolidics has raised a total of $13.9 million in convertible notes and bonds, $13.6 million in convertible preference shares as well as a Series C round of $6.7 million.

In FY2017 ended Dec 31, Biolidics recorded revenue of $2.1 million and a net loss of $7.2 million. Net losses have narrowed from $8 million in FY2015. Last year, Japan and China accounted for 17.5% and 14.6% of revenue, respectively. The company recorded net cash used from operating activities of $3.7 million in FY2017. It had cash and cash equivalents of $2.5 million as at last year.

For the six months ended June 30, Biolidics chalked up unaudited pro forma revenue of $600,000 and a net loss of $1.9 million.

Apart from Clearbridge and Enterprise Singapore, other significant shareholders in Biolidics include Xie Tian, the dean of the department of medical oncology at Hangzhou Normal University, who will own a 0.64% in the company. The company’s co-founder, Johnson Chen, will remain a non-independent director. Clearbridge CEO Yee is the group’s non-executive and non-independent chairman. Yee used to be the CEO of Cordlife Group. James Ong, chief investment officer of supply chain company YCH Group, is also an independent director in Biolidics.

The IPO is managed by United Overseas Bank.

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