Temple City-based Fulgent Genetics Inc., which rode the Covid testing wave to become a billion-dollar company, now has a new post-Covid strategy, and it’s a hefty dose of back to the future. Fulgent Genetics announced on Nov. 7 that it is acquiring Fulgent Pharma, a former affiliate, for $100 million to begin a transformation into a vertically integrated cancer diagnostic and treatment company.
Six years ago, Fulgent Pharma and Fulgent Genetics were both part of a company called Fulgent Therapeutics, which was co-founded in 2011 by then-billionaire Ming Hsieh with proceeds from his $940 million sale the previous year of biometric security company Cogent to IBM. But in 2016, Fulgent Therapeutics jettisoned the drug-development unit as it took the genetic-testing portion of its business public and adopted the name Fulgent Genetics.
Fulgent Pharma has since been run as a private cancer therapeutics company by Hsieh and the other Fulgent Therapeutics co-founder Ray Yin. The company has been developing a targeted cancer therapy drug platform to improve the treatment window for certain cancer drug.
Fulgent Genetics, meanwhile, has gone on a wild ride. Through 2019, it was a small genetic testing company. That year, the company, then at $32 million in annual revenue, launched a home genetic-testing business that it hoped would lead to steady growth. But then the pandemic hit, and Fulgent Genetics pivoted big-time to Covid testing, snagging several huge public-sector contracts. By the end of last year, Fulgent had grown into a $1 billion company with a sizable nationwide lab network.
But this year, Fulgent Genetics’ Covid test volume has dropped off considerably; the company has sought to diversify, but investors have been wary and sent the stock down nearly 60% to the mid-$30 range. Fulgent Genetics did make two significant acquisitions in the cancer-diagnostic space: CSI Laboratories in August of last year for an undisclosed sum reported to be more than $50 million; and pathology laboratory company Inform Diagnostics for $170 million this past April.
Now, with the purchase of Fulgent Pharma, Fulgent Genetics’ post-Covid strategy has become much clearer.
“We believe this acquisition has a potential to rapidly transform Fulgent Genetics from a genetic diagnostic service business into a fully integrated precision medicine company focusing on oncology,” Hsieh said in a conference call.
