China’s colorectal cancer screening biotechnology company, New Horizon Health (NHH) has completed a $30 million Series E funding led by healthcare hedge fund Rock Springs Capital, bringing its total funding to date to more than $160 million, the company announced on Friday. One third of the total funding has come in the second quarter of 2020 as the molecular diagnostic company completed a pivotal trial of a prospective clinical study for its flagship cancer screening product earlier this year.
The new funding has come from New York-based OrbiMed, biomedical venture capital firm Lilly Asia Ventures, investment manager Cormorant Asset Management, equity fund CR-CP Life Science Fund Management, private investment fund Octagon Capital and existing investor Qiming Venture Partners. The money raised in this round will be primarily used to commercialize the company’s product portfolio, and to accelerate its pipeline development, according to the company’s press release.
Founded in 2013, New Horizon Health provides home test kits for early-stage colorectal cancer, intestinal cancer, lung cancer and cervical cancer to prevent diseases by early detections. Without the painful and invasive procedure that a colonoscopy usually brings to the patients, the multi-stage stool FIT-DNA detection developed by New Horizon Health allows patients to take samples at home, mail the samples to medical testing laboratories in Hangzhou, Beijing or Shenzhen, and get treatment in hospitals if they test positive. The company claims to have already served more than 3 million customers.
The latest round of money kicked in no more than three months after the Hangzhou-based company closed a $20 million financing in April, which was led by private equity firm Omniscience Capital and Exome Asset Management LLC. Two funding rounds have followed the clinical trial the company completed earlier this year.
“Potential investors have been paying close attention to our clinical study,” Yeqing Zhu, the co-founder and CEO of New Horizon Health said in a press conference on Friday. “The study result cannot be released to the public, but foreign investors were willing to examine the clinical trial results before they make the investment decision.”
The biotech startup has obtained more money from the international capital market compared with previous rounds. Zhu noted that the company’s technical barrier, intellectual property and capability of the R&D team are three key items that foreign capitals are looking at.
“Investors abroad will look at whether our technical barrier is high enough to block other companies from entering the industry and whether our detection technology is exclusive for their capital support,” Zhu said. “They also raised expectations for the R&D team to see what they can get them.”
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Targeting its US rival, the Nasdaq-listed molecular diagnostics company Exact Sciences, New Horizon Health has a similar initial focus on early colorectal cancer detection and prevention, but is focused on a different market. The US precursor’s multi-target stool DNA screening test got approved by the U.S. Food and Drug Administration (FDA) in 2016, and has a market value of nearly $14 billion.
“The success of Exact Sciences in the U.S. allows international investors to see the potentials of the cancer screening industry,” Zhu said when asked the difference between expectations from foreign capitals and domestic funds. “If a Chinese company has similar or more advanced technology and puts it to good use in the mainland market, the market must be growing in the future.”
“We look forward to partnering with them as they bring important new diagnostics to market,” said Mark Bussard, the General Member of Rock Springs Capital. “We are pleased to invest in such an innovative company that is endeavoring to bring real clinical benefits to millions of people who are at elevated risk of developing colorectal cancer.”
Bloomberg reported in May that New Horizon had arranged an initial public offering in the near future with a target to raise $300 million, citing people familiar with the matter.
“We are working toward an IPO,” Zhu said on Friday. “That’s what our investors would like to see, but we need to be mindful of surges in global capital markets.”
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