The BGI Genomics IPO – Is This a Chinese Illumina?

The Chinese are some of the most fascinating people on the planet as far as we’re concerned, all 1.379 billion of them. They mastered medicine long before the West did, they love to ride bikes, they have some of the best and most widely varied Chinese food of any country out there, they love to speak Engrish (though they’re now working on fixing that),  and they are in sole possession of the world’s giant panda population which they occasionally dole out in diplomatic gestures of kindness. The Chinese are curious people with a tendency towards anthropomorphism, which shouldn’t be confused with a lack of mental maturity when it comes to understanding all things technology. If there is one race out there that might start bio-hacking themselves using gene editing, we’d put our money on the Chinese. In fact, they’ve already started working on it. This is why we were particularly interested to see BGI Genomics (SHE:300676) debut their IPO a few days, and as investors, we want to know more.

About BGI Genomics (SHE:300676)

We first came across the Beijing Genomics Institute (BGI) when we were researching our article on the top-5 artificial intelligence (AI) healthcare companies. At the top of the list was a startup called iCarbonX whose founder also co-founded BGI back in 1999. BGI is headquartered in Shenzhen, China and has more than 5,000 employees located in 47 labs, one-third of which are located outside of China. They now claim to be the largest genomic organization in the world, and we’re prone to believe that when looking at how massive just one of their ventures in Shenzhen is (the China National Genebank) that sits on a 47.5 square kilometer plot of land:

The Biggest Genomics Company in the World?

BGI currently operates in more than 100 countries and regions and works with more than 3000 medical institutions and more than 300 hospitals. Next, let’s take a look at some of their subsidiaries and projects.

  • Complete Genomics (CG) – This Silicon Valley startup had gone public back in 2010 but was acquired by BGI in 2013 for about $117 million. At the time they were acquired, CG had already sequenced 20,000 whole human genomes. In 2015, BGI announced that they had developed their own sequencer using CG’s “DNA nanoballs technology” that could process 1 million genomes per year. Here is a look at their BGISEQ-50 sequencer:It not only looks like an Illumina (NASDAQ:ILMN) sequencer but they’re actually using the same naming convention as the Illumina machines. It’s at this point that we could make a tasteless comment about how the Chinese like to copy everything they can get their hands on, but we’re not going to do that.
  • China National Genebank – This is a nonprofit created in 2011 with funding from BGI and the Chinese government. Their mission is to capture and catalog human, plant, and animal species and they claim to have 80% of the finished large genome projects in the world. They have 150 of the BGISEQ-500 machines you see above giving them a capacity of 150 million genomes a year that they can then store in their 58 petabyte data center (enough space to store 197 years of continuous HD video).
  • BGI Research – The research arm of BGI is equally impressive with their 259 sequencers (including Illumina machines) and several supercomputing centers. Apparently they do loads of collaborating in the areas of personal genomics, cancer, reproductive health, and molecular breeding, beating out companies like IBM, Samsung, and Pfizer:

  • Gigascience – Staying on the topic of collaboration, this next project BGI has going is an open-access online journal that was launched in 2012 and integrates full-text articles alongside data sets which allows them to publish “big data” studies for various life sciences like neuroscience, medical imaging, and genomics of course.
  • BGI College – You may need to take a seat for this next incredible revelation. Here it goes. In order to work in STEM, you don’t get there by spending your time online complaining about how you’re somehow being prevented from doing so. You get down to BGI College and join the 110 PhD students, 300 MSc students, and 370 undergraduate students, who will have great future careers ahead of them in STEM because they worked their butts off.
  • BGI Forensics – If instead of studying STEM you opt for a life of crime, you better watch out for this unit of BGI Genomics. They do forensic testing for criminal cases and have handled 100,000 cases so far. Do you realize that if just 1 out of 100 Chinese people opts for a life of crime, that China would have more criminals than the entire population of Tokyo?
  • BGI Agriculture – With China being the most populous country on the entire planet, they need to think about how they can feed everyone more efficiently. This branch of BGI Genomics has sequenced 130 out of 188 major crops and contributed more than 70% of the agricultural genomics data globally. One of the projects they are working on is millet which frankly looks delicious AF:

The remainder of what BGI gets up to runs the gamut from a BGI Fishery to Non Invasive Prenatal Testing or NIPT, a topic we’ve covered before. They sell the world’s leading NIPT test, NIFT, with 1 million NIFT tests performed across the globe to date, along with 1.5 million HPV tests and a slew of other test types in 29 laboratories located around the world. They provide research services to over 4,000 different organizations and are a global leader in ‘omics research projects (genomics, proteomics, metabolomics, etc.). They also found a genetic mutation that may explain why the giant panda prefers bamboo over meat.

The BGI Genomics IPO

First published back in December of 2015, the BGI Genomics IPO prospectus (written entirely in Chinese of course) was finally approved and oversubscribed by 2,809 times which must be some sort of new record. Essentially this means that while they were only offering 40.1 million shares for sale, they could have sold over 112 billion shares. The 40.1 million shares that they did sell were sold at $2.02 apiece meaning they raised just over $80 million. As you would expect, when shares began trading on July 14th, investors went crazy and pushed the price up more than 30% before the exchange halted trading. After all the dust has settled, we see that today shares are selling for $4.24 meaning they’ve already doubled. This results in a present day market cap for BGI Genomics of around $1.7 billion.

BGI Genomics vs. Illumina

It’s really unfair to compare these two companies, mainly because we know so little about what BGI is getting up to under the covers. Aside from what we’ve told you in this article, we really don’t know what their financials look like and that certainly comes into play when comparing two companies. We do know that Illumina is 15X the size of BGI Genomics with a market cap of $25.7 billion. We also know that in 2016 Illumina saw $2.4 billion in revenues compared to about $252.8 million in 2016 revenues from BGI Genomics. According to an article in FierceBiotech a few days ago, “BGI’s research business has contracted in recent years, forcing it to shift its focus on to its reproductive health screening unit”. Then, we found this gem which Nature pulled together from the prospectus:

One thing for sure is that BGI no longer needs to rely on Illumina for machines as their own sequencers that they copied built are going head-to-head in comparative tests according to an article by GenomeWeb which is unfortunately behind a paywall.

How to Buy Shares in BGI Genomics

When it comes to investing our hard earned money in emerging technologies, we’re prone to proceed with caution. With the majority of our funds in dividend growth investing stocks, we’re left to make selective stock picking bets in hopes of “finding the next Microsoft” as they say. ILMN is one stock we’ve been accumulating on dips for reasons we gave before. Now, we’re thinking we need some shares of BGI Genomics for some diversification. Of course to buy shares of BGI Genomics on the Shenzhen stock exchange, you’ll need to be a Chinese citizen.

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