!
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 7, 2022, Fulgent Genetics, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended September 30, 2022. A copy of the Company’s press release containing this information is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure
On November 7, 2022, the Company issued a press release announcing its acquisition of Fulgent Pharma Holdings, Inc. A copy of the Company’s press release containing this information is being furnished as Exhibit 99.2 to this Current Report on Form 8-K.
From time to time, the Company presents and/or distributes slides and presentations to the investment community to provide updates and summaries of its business. On November 7, 2022, the Company updated its investor presentation, which is available on the “Investor Relations” section of the Company’s website at https://fulgentgenetics.com/, and prepared a presentation announcing the Company’s acquisition of Fulgent Pharma Holdings, Inc. These presentations are also furnished as Exhibit 99.3 and 99.4 to this Current Report on Form 8-K.
The information in Items 2.02 and 7.01, including Exhibits 99.1, 99.2, 99.3 and 99.4, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any registration statement or other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
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Description |
99.1 |
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Press Release of Fulgent Genetics, Inc., dated November 7, 2022 |
99.2 |
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Press Release of Fulgent Genetics, Inc., dated November 7, 2022 |
99.3 |
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99.4 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 7, 2022 |
FULGENT GENETICS, INC. |
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By: |
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/s/ Paul Kim |
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Name: |
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Paul Kim |
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Title: |
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Chief Financial Officer |
Exhibit 99.1
Fulgent Genetics Reports Third Quarter 2022 Financial Results
TEMPLE CITY, CA, November 7, 2022 —Fulgent Genetics, Inc. (NASDAQ: FLGT) (“Fulgent Genetics”, “Fulgent”, or the “Company”), a technology-based genetic testing company focused on transforming patient care in oncology, infectious and rare diseases, and reproductive health, today announced financial results for its third quarter ended September 30, 2022.
Third Quarter 2022 Results:
Note:
Non-GAAP income (loss) and adjusted EBITDA are described below under “Note Regarding Non-GAAP Financial Measures” and are reconciled to the most directly comparable GAAP financial measure, GAAP income (loss), in the accompanying tables.
Ming Hsieh, Chairman of the Board and Chief Executive Officer, said, “I am pleased with the trajectory of the business as we focus on our long-term strategy and begin to realize my vision to expand our footprint across the genomic testing and therapeutics landscape. With our diversification into oncology and pathology added to our robust test menus for pediatric genetics, reproductive health, hereditary cancer, neurological conditions and more, we have created one of the largest test menus in our industry. We are committed to fueling growth in our diagnostics business through organic and strategic investments.”
Paul Kim, Chief Financial Officer, said, “Our third quarter results came in as expected with our core business doubling year-over-year. As COVID-19 testing winds down, we see momentum building in our core business with the integration of Inform Diagnostics. While we are experiencing some pressure on results in the fourth quarter, we view it as transitory and believe our foundational technology platform supports a strong revenue and margin profile in the years ahead.”
Outlook:
For the fourth quarter of 2022, Fulgent Genetics expects:
For the full year 2022, Fulgent Genetics expects:
Fulgent has not reconciled its expectations as to non-GAAP income per share to the most directly comparable GAAP measure because certain items are out of Fulgent’s control or cannot be reasonably predicted. Accordingly, a reconciliation for forward-looking non-GAAP income per share is not available without unreasonable effort.
Conference Call Information
Fulgent Genetics will host a conference call for the investment community today at 4:30 PM ET (1:30 PM PT) to discuss its third quarter 2022 results. Press and industry analysts are invited to attend in listen-only mode.
The call may be accessed through a live audio webcast on the Investor Relations section of the company’s website, http://ir.fulgentgenetics.com. An audio replay will be available at the same location.
Note Regarding Non-GAAP Financial Measures
Certain information set forth in this press release, including non-GAAP income (loss), non-GAAP income (loss) per share, and adjusted EBITDA are non-GAAP financial measures. Fulgent Genetics believes this information is useful to investors because it provides a basis for measuring the performance of the Company’s business, excluding certain income or expense items that management believes are not directly attributable to the Company’s operating results. Fulgent Genetics defines non-GAAP income (loss) as net income (loss) calculated in accordance with accounting principles generally accepted in the United States of America, or GAAP, plus amortization of intangible assets, plus restructuring costs, plus acquisition-related costs, including banking fees and legal fees associated with the recent acquisition, plus equity-based compensation expense, plus or minus the non-GAAP tax effect, and plus or minus other charges or gains, as identified, that management believes are not representative of the Company’s operations. The non-GAAP tax effect is calculated by applying the statutory corporate tax rate on the amortization of intangible assets, restructuring costs, acquisition-related costs, and equity-based compensation expense. Fulgent Genetics defines adjusted EBITDA as GAAP income (loss) plus or minus interest (expense) income, plus or minus provisions (benefits) for income taxes, plus restructuring costs, plus acquisition-related costs, plus equity-based compensation expense, plus depreciation and amortization, and plus or minus other charges or gains, as identified, that management believes are not
representative of the Company’s operations. Fulgent Genetics may continue to incur expenses similar to the items added to or subtracted from GAAP income (loss) to calculate non-GAAP income (loss) and adjusted EBITDA; accordingly, the exclusion of these items in the presentation of these non-GAAP financial measures should not be construed as an implication that these items are unusual, infrequent or non-recurring. Management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measure of net income (loss) in evaluating the Company's operating performance. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in conformity with GAAP, and non-GAAP financial measures as reported by Fulgent Genetics may not be comparable to similarly titled metrics reported by other companies.
About Fulgent Genetics
Fulgent Genetics is a technology-based genetic testing company focused on transforming patient care in oncology, infectious and rare diseases, and reproductive health. Fulgent Genetics’ proprietary technology platform has created a broad, flexible test menu and the ability to continually expand and improve its proprietary genetic reference library while maintaining accessible pricing, high accuracy, and competitive turnaround times. Combining next generation sequencing, or NGS, with its technology platform, the Company performs full-gene sequencing with deletion/duplication analysis in an array of panels that can be tailored to meet specific customer needs. A cornerstone of the Company’s business is its ability to provide expansive options and flexibility for all clients’ unique testing needs through a comprehensive technology offering including cloud computing, pipeline services, record management, web portal services, clinical workflow, sequencing as a service and automated laboratory services.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements in this press release include statements about, among other things: future performance, guidance regarding, expected quarterly and annual financial results, including revenues, core revenues, GAAP income, and non-GAAP income; evaluations and judgments regarding trajectory, momentum, vision, expansion strategies, diversification, acquisition strategies, and synergies related to and the performance of acquired businesses (including Inform Diagnostics), investments and partnerships, relationships and the Company’s testing services and technology; future growth and the Company’s testing services and technologies and expansion; the Company’s identification and evaluation of opportunities and its ability to capitalize on opportunities, capture market share, or to expand its presence in certain markets; and the Company’s ability to continue to grow its business.
Forward-looking statements are statements other than historical facts and relate to future events or circumstances or the Company’s future performance, and they are based on management’s current assumptions, expectations, and beliefs concerning future developments and their potential effect on the Company’s business. These forward-looking statements are subject to a number of risks and uncertainties, which may cause the forward-looking events and circumstances described in this press release to not occur, and actual results to differ materially and adversely from those described in or implied by the forward-looking statements. These risks and uncertainties include, among others: the ongoing impacts of the COVID-19 pandemic, including the preventive public health measures that may continue to impact demand for its tests and the pandemic’s effects on the global supply chain; the market potential for, and
the rate and degree of market adoption of, the Company’s tests, including its tests for COVID-19 and genetic testing generally; the Company’s ability to capture a sizable share of the developing market for genetic and COVID-19 testing and to compete successfully in these markets, including its ability to continue to develop new tests that are attractive to its various customer markets, its ability to maintain turnaround times and otherwise keep pace with rapidly changing technology; the Company’s ability to maintain the low internal costs of its business model, particularly as the Company makes investments across its business; the Company’s ability to maintain an acceptable margin on sales of its tests, particularly in light of increasing competitive pressures and other factors that may continue to reduce the Company’s sale prices for and margins on its tests; risks related to volatility in the Company’s results, which can fluctuate significantly from period to period; risks associated with the composition of the Company’s customer base, which can fluctuate from period to period and can be comprised of a small number of customers that account for a significant portion of the Company’s revenue; the Company’s ability to grow and diversify its customer base and increase demand from existing and new customers; the Company’s investments in its infrastructure, including its sales organization and operational capabilities, and the extent to which these investments impact the Company’s business and performance and enable it to manage any growth it may experience in future periods; the Company’s level of success in obtaining coverage and adequate reimbursement and collectability levels from third-party payors for its tests; the Company’s level of success in establishing and obtaining the intended benefits from partnerships, strategic investments, joint ventures, acquisitions, or other relationships; the Company’s compliance with the various evolving and complex laws and regulations applicable to its business and its industry; risks associated with the Company’s international operations; the Company’s ability to protect its proprietary technology platform; and general industry, economic, political and market conditions. As a result of these risks and uncertainties, forward-looking statements should not be relied on or viewed as predictions of future events.
The forward-looking statements made in this press release speak only as of the date of this press release, and the Company assumes no obligation to update publicly any such forward-looking statements to reflect actual results or to changes in expectations, except as otherwise required by law.
The Company’s reports filed with the U.S. Securities and Exchange Commission, or the SEC, including its annual report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 28, 2022 and the other reports it files from time to time, including subsequently filed annual, quarterly and current reports, are made available on the Company’s website upon their filing with the SEC. These reports contain more information about the Company, its business and the risks affecting its business, as well as its results of operations for the periods covered by the financial results included in this press release.
Investor Relations Contact:
The Blueshirt Group
Melanie Solomon, melanie@blueshirtgroup.com
FULGENT GENETICS, INC. |
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Condensed Consolidated Balance Sheet Data |
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September 30, 2022 and December 31, 2021 |
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(in thousands) |
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September 30, |
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December 31, |
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2022 |
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2021 |
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ASSETS: |
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Cash and cash equivalents |
$ |
168,770 |
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$ |
164,894 |
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Investments in marketable securities |
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749,236 |
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770,652 |
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Accounts receivable, net |
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104,159 |
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138,912 |
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Property, plant, and equipment, net |
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81,807 |
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62,287 |
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Other assets |
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301,810 |
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141,975 |
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Total assets |
$ |
1,405,782 |
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$ |
1,278,720 |
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LIABILITIES & EQUITY: |
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Accounts payable, accrued liabilities and other liabilities |
$ |
124,385 |
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$ |
112,840 |
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Total stockholders' equity |
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1,281,397 |
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1,165,880 |
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Total liabilities & equity |
$ |
1,405,782 |
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$ |
1,278,720 |
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FULGENT GENETICS, INC. |
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Condensed Consolidated Statement of Income Data |
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Three and Nine Months Ended September 30, 2022 and 2021 |
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(in thousands, except per share data) |
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(unaudited) |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Revenue |
$ |
105,655 |
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$ |
227,868 |
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$ |
551,264 |
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$ |
740,913 |
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Cost of revenue (1) |
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59,560 |
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43,466 |
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197,350 |
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153,399 |
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Gross profit |
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46,095 |
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184,402 |
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353,914 |
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587,514 |
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Operating expenses: |
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Research and development (1) |
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7,507 |
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6,021 |
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20,401 |
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16,755 |
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Selling and marketing (1) |
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9,859 |
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6,012 |
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28,665 |
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16,239 |
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General and administrative (1) |
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26,266 |
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12,299 |
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82,281 |
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28,630 |
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Amortization of intangible assets |
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2,006 |
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797 |
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4,487 |
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797 |
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Restructuring costs |
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105 |
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— |
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3,001 |
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— |
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Total operating expenses |
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45,743 |
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25,129 |
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138,835 |
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62,421 |
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Operating income |
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352 |
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159,273 |
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215,079 |
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525,093 |
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Interest and other income, net |
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1,405 |
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496 |
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2,408 |
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1,382 |
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Income before income taxes and gain on equity method investment |
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1,757 |
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159,769 |
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217,487 |
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526,475 |
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Provision for income taxes |
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414 |
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37,545 |
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51,488 |
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127,647 |
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Income before gain on equity method investment |
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1,343 |
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122,224 |
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165,999 |
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398,828 |
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Gain on equity method investment |
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— |
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— |
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— |
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3,734 |
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Net income from consolidated operations |
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1,343 |
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122,224 |
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165,999 |
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402,562 |
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Net loss attributable to noncontrolling interests |
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376 |
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298 |
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1,236 |
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463 |
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Net income attributable to Fulgent |
$ |
1,719 |
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$ |
122,522 |
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$ |
167,235 |
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$ |
403,025 |
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Net income per common share attributable to Fulgent: |
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Basic |
$ |
0.06 |
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$ |
4.13 |
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$ |
5.53 |
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$ |
13.79 |
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Diluted |
$ |
0.06 |
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$ |
3.93 |
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$ |
5.38 |
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$ |
13.04 |
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Weighted average common shares: |
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Basic |
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30,174 |
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29,673 |
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30,256 |
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29,221 |
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Diluted |
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30,867 |
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31,170 |
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31,107 |
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30,906 |
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(1) Equity-based compensation expense was allocated as follows: |
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Cost of revenue |
$ |
2,475 |
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$ |
962 |
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$ |
6,183 |
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$ |
2,328 |
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Research and development |
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2,687 |
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1,757 |
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7,110 |
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4,461 |
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Selling and marketing |
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1,243 |
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693 |
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3,148 |
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1,739 |
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General and administrative |
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2,567 |
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962 |
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6,177 |
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2,334 |
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Total equity-based compensation expense |
$ |
8,972 |
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$ |
4,374 |
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$ |
22,618 |
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$ |
10,862 |
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FULGENT GENETICS, INC. |
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Non-GAAP Income Reconciliation |
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Three and Nine Months Ended September 30, 2022 and 2021 |
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(in thousands, except per share data) |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Net income attributable to Fulgent |
$ |
1,719 |
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$ |
122,522 |
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$ |
167,235 |
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$ |
403,025 |
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Amortization of intangible assets |
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2,006 |
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797 |
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4,487 |
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797 |
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Restructuring costs |
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105 |
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— |
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3,001 |
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— |
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Acquisition-related costs |
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166 |
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— |
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6,575 |
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— |
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Equity-based compensation expense |
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8,972 |
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4,374 |
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22,618 |
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10,862 |
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Non-GAAP tax effect (1) |
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(3,150 |
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(1,396 |
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(10,271 |
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(3,148 |
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Gain on equity method investment |
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— |
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— |
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— |
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(3,734 |
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Non-GAAP income attributable to Fulgent |
$ |
9,818 |
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$ |
126,297 |
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$ |
193,645 |
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$ |
407,802 |
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Net income per common share attributable to Fulgent: |
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Basic |
$ |
0.06 |
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$ |
4.13 |
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$ |
5.53 |
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$ |
13.79 |
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Diluted |
$ |
0.06 |
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$ |
3.93 |
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$ |
5.38 |
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$ |
13.04 |
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Non-GAAP income per common share attributable to Fulgent: |
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Basic |
$ |
0.33 |
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$ |
4.26 |
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$ |
6.40 |
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$ |
13.96 |
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Diluted |
$ |
0.32 |
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$ |
4.05 |
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$ |
6.23 |
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$ |
13.19 |
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Weighted average common shares: |
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Basic |
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30,174 |
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29,673 |
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30,256 |
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29,221 |
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Diluted |
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30,867 |
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31,170 |
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31,107 |
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30,906 |
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(1) Tax rates as follows: |
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Corporate tax rate of 28% for the three and nine months ended September 30, 2022. |
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Corporate tax rate of 27% for the three and nine months ended September 30, 2021. |
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FULGENT GENETICS, INC. |
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Non-GAAP Adjusted EBITDA Reconciliation |
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Three and Nine Months Ended September 30, 2022 and 2021 |
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||||||
(in thousands) |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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||||||||||
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2022 |
|
|
2021 |
|
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2022 |
|
|
2021 |
|
||||
Net income attributable to Fulgent |
$ |
1,719 |
|
|
$ |
122,522 |
|
|
$ |
167,235 |
|
|
$ |
403,025 |
|
Interest income, net |
|
(1,452 |
) |
|
|
(357 |
) |
|
|
(1,587 |
) |
|
|
(1,513 |
) |
Provision for income taxes |
|
414 |
|
|
|
37,545 |
|
|
|
51,488 |
|
|
|
127,647 |
|
Restructuring costs |
|
105 |
|
|
|
— |
|
|
|
3,001 |
|
|
|
— |
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Acquisition-related costs |
|
166 |
|
|
|
— |
|
|
|
6,575 |
|
|
|
— |
|
Equity-based compensation expense |
|
8,972 |
|
|
|
4,374 |
|
|
|
22,618 |
|
|
|
10,862 |
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Depreciation and amortization |
|
9,820 |
|
|
|
3,173 |
|
|
|
22,860 |
|
|
|
7,513 |
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Gain on equity method investment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,734 |
) |
Adjusted EBITDA |
$ |
19,744 |
|
|
$ |
167,257 |
|
|
$ |
272,190 |
|
|
$ |
543,800 |
|
Exhibit 99.2
Fulgent Genetics Acquires Fulgent Pharma, Creating a New Paradigm in Precision Medicine for The Company
Fulgent Genetics aims to transform from a genomic diagnostic business into a fully integrated precision medicine company focused on oncology
Fulgent Pharma’s proprietary novel nano-drug delivery technology platform synergistically underpins the combined businesses, potentially providing both near- and long-term market opportunities
Fulgent to discuss acquisition on scheduled earnings conference call and webcast today at 1:30 p.m. PT
TEMPLE CITY, California – November 7, 2022 – Fulgent Genetics, Inc. (NASDAQ: FLGT), a technology-based genetic testing company focused on transforming patient care in oncology, infectious and rare diseases, and reproductive health, announced today that it has completed an acquisition of Fulgent Pharma Holdings, Inc. (“Fulgent Pharma”), an independent clinical-stage, therapeutics development company focused on the development of innovative cancer treatments. Under the terms of the agreement, Fulgent Genetics acquired Fulgent Pharma for a total purchase price of approximately $100 million, subject to adjustments, to be paid with a combination of cash on hand and shares of common stock of Fulgent Genetics.
The combined company plans to offer a vertically integrated solution to combat cancer with the potential to unlock significant long-term upside for both the therapeutic and diagnostic businesses, while effectively managing risk. Fulgent Pharma and Fulgent Genetics were previously both owned by Fulgent Therapeutics until 2016, when the businesses were separated ahead of the Initial Public Offering of Fulgent Genetics. The companies have operated as separate entities since 2016, enabling each business to focus on and achieve core objectives across genetic testing and therapeutic drug development. Over the last year, Fulgent Genetics has established a meaningful presence in the large market for molecular diagnostics and oncologic testing, most notably with the recent acquisitions of CSI Laboratories and Inform Diagnostics, and the opening of a state-of-the-art oncologic testing facility in southern California. Fulgent Pharma has developed a novel nanoencapsulation and targeted therapy platform, which is designed to improve the therapeutic window and pharmacokinetic profile of new and existing cancer drugs. Based on current studies and pre-designated criteria, Fulgent Pharma believes its lead drug candidate, FID-007, has achieved proof-of-concept in preliminary human clinical trials for the treatment of various cancer types, including Head and Neck, Ampullary, Pancreatic, NSCLC, and Breast.
“This acquisition advances our mission to build a holistic platform to provide comprehensive solutions and services across the cancer care continuum, including early detection, diagnostics, and monitoring, as well as drug discovery and development,” said Ming Hsieh, Chairman and CEO of Fulgent Genetics and co-founder of Fulgent Therapeutics. “With my commitment and our teams already in place, the combination of these two businesses diversifies our assets and will, we believe, provide sustainable future revenue and margin opportunity through a potentially lucrative target oncology market.”
“In addition to FID-007, our proprietary nano-drug delivery platform has generated a deep pipeline of wholly owned drug candidates, focused on additional target cancer indications, including one for colon cancer and one NCE (new chemical entity) targeting the STING pathway. Both have been tested extensively in preclinical studies,” said Ray Yin, PhD., President and Chief Scientific Officer of Fulgent Pharma and co-founder of Fulgent Therapeutics. “Through this acquisition, Fulgent Pharma will have access to commercial relationships across the oncology market as well as capital to fund research, development and, assuming the requisite regulatory approvals, commercialization as part of Fulgent Genetics.”
Strategic Vision
Advisors
A special committee comprised of independent members of Fulgent Genetics’ board of directors was established to review this transaction. In consultation with its independent financial and legal advisors, the special committee recommended the board of directors approve the Fulgent Pharma acquisition. The
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special committee was advised by First Principles Advisory Group and Cooley LLP. Fulgent Genetics was represented in the transaction by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.; and Procopio, Cory, Hargreaves & Savitch LLP acted as legal counsel to Fulgent Pharma.
Conference Call Information
Fulgent Genetics will discuss this transaction during its scheduled third quarter 2022 earnings conference call and webcast being held today at 4:30 PM ET (1:30 PM PT). The call and associated presentation may be accessed through a live audio webcast on the Investor Relations section of the company’s website, http://ir.fulgentgenetics.com. An audio replay will be available at the same location.
About Fulgent Genetics
Fulgent Genetics is a technology-based genetic testing company focused on transforming patient care in oncology, infectious and rare diseases, and reproductive health. Fulgent’s proprietary technology platform has created a broad, flexible test menu and offered the ability to continually expand and improve its proprietary genetic reference library, while also maintaining accessible pricing, high accuracy, and competitive turnaround times. Combining next generation sequencing (“NGS”) with its technology platform, Fulgent performs full-gene sequencing with deletion/duplication analysis in an array of panels that can be tailored to meet specific customer needs. A cornerstone of Fulgent’s business is its ability to provide expansive options and flexibility for all clients’ unique testing needs through a comprehensive technology offering including cloud computing, pipeline services, record management, web portal services, clinical workflow, sequencing as a service, and automated lab services.
About Fulgent Pharma
Fulgent Pharma began as Fulgent Therapeutics in Temple City, California, in June 2011. As the company progressed into the sphere of personalized medicine, it also started delving into clinical genetic testing - a natural complement. In 2016, Fulgent Therapeutics split into two separate entities - Fulgent Pharma and Fulgent Genetics - in order to better pursue their independent objectives. Today, Fulgent Pharma is fully focused on perfecting drug candidates for treating a broad range of cancers. Its partners in this endeavor include the University of Southern California, Moffitt Cancer Center, and ANP Technologies.
About FID-007
FID-007 consists of paclitaxel encapsulated in a polyethyloxazoline (PEOX) polymer excipient designed to enhance PK, biodistribution, and tolerability. In addition to allowing the drug to remain in solution until it can enter a cancer cell, the PEOX nanoparticle is designed to preferentially deliver paclitaxel to the tumor through the leaky hyperpermeable vasculature.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements in this press release include statements about, among other things: management’s and others’ beliefs, judgments, and estimates regarding Fulgent Pharma’s business, prospects, technology platform, therapeutic candidates, therapeutic candidates’ value to Fulgent and their potential benefit to Fulgent’s business, platform, services, products and product candidates; long-term visions and strategies, including, with respect to Fulgent Pharma, those designed to create a vertically integrated solution for cancer care, the clinical development of Fulgent
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Pharma’s pipeline, and related statements and assumptions regarding development timelines, potentially accelerated pathway for regulatory approval; the potential safety or efficacy of the nano-drug delivery platform and any related therapeutic candidates; the potential market size for these candidates and platforms and the value of available data, including genomic data; Fulgent’s testing solutions and services, including its laboratory capacity and related matters; Fulgent’s identification and evaluation of opportunities, estimates of market size or covered lives, and its ability to capitalize on opportunities to grow its business.
Forward-looking statements are statements other than historical facts; they relate to future events or circumstances and to Fulgent’s and/or Fulgent Pharma’s future performance; and they are based on management’s current assumptions, expectations, and beliefs concerning future developments and their potential effect on Fulgent’s business. These forward-looking statements are subject to a number of risks and uncertainties, which may cause the forward-looking events and circumstances described in this press release to not occur and actual results to differ materially and adversely from those described in or implied by the forward-looking statements. These risks and uncertainties include, among others: the potential impact of the announcement or consummation of the acquisition on relationships with third parties, including employees, customers, partners and competitors; inability to retain key personnel; changes in legislation or government regulations affecting the acquisition or the parties; economic, social, or political conditions that could adversely affect the acquisition or the parties; Fulgent Pharma may not produce the anticipated benefits discussed in this release; Fulgent Pharma’s therapeutic candidates may not realize the anticipated benefits discussed in this release or may suffer delays that materially and adversely affect their future commercial viability; the integration of Fulgent Pharma may consume more management and other resources than anticipated; the potential of oncology markets; oncology markets may not grow at the rates anticipated; the ongoing impacts of the COVID-19 pandemic, including the preventive public health measures that may continue to impact demand for Fulgent’s genetics tests and the pandemic’s effects on the global supply chain; the market potential for, and the rate and degree of market adoption of, Fulgent’s tests, including its tests for COVID-19 and genetic testing generally; Fulgent’s ability to compete successfully, including its ability to continue to develop new tests that are attractive to its various customer markets and its ability to maintain turnaround times and otherwise keep pace with rapidly changing technology; Fulgent’s ability to successfully integrate acquired businesses and assets, including Fulgent Pharma, into its business strategy and to derive value from its investments; Fulgent’s ability to maintain the low internal costs of its business model, particularly as Fulgent makes investments across its business; Fulgent’s ability to maintain an acceptable margin on sales of its tests, particularly in light of increasing competitive pressures and other factors that may continue to reduce Fulgent’s sale prices for and margins on its tests; risks related to volatility in Fulgent’s results, which can fluctuate significantly from period to period; risks associated with the composition of Fulgent’s customer base, which can fluctuate from period to period and can be comprised of a small number of customers that account for a significant portion of Fulgent’s revenue; Fulgent’s ability to grow and diversify its customer base and increase demand from existing and new customers; Fulgent’s investments in its infrastructure, including its sales organization and operational capabilities, and the extent to which these investments impact Fulgent’s business and performance and enable it to manage any growth it may experience in future periods; Fulgent’s level of success in obtaining coverage and adequate reimbursement and collectability levels from third-party payors for its tests; Fulgent’s level of success in establishing and obtaining the intended benefits from Fulgent Pharma, partnerships, joint ventures, or other relationships;
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Fulgent’s compliance with the various evolving and complex laws and regulations applicable to its business and its industry; risks associated with Fulgent’s international operations; Fulgent’s ability to protect its proprietary technology platform; and general industry, economic, political, and market conditions. As a result of these risks and uncertainties, forward-looking statements should not be relied on or viewed as predictions of future events.
The forward-looking statements made in this press release speak only as of the date of this press release, and Fulgent assumes no obligation to update publicly any such forward-looking statements to reflect actual results or to changes in expectations, except as otherwise required by law.
Fulgent’s reports filed with the U.S. Securities and Exchange Commission (“SEC”), including its annual report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 28, 2022 and the other reports it files from time to time, including subsequently filed quarterly and current reports, are made available on Fulgent’s website upon their filing with the SEC. These reports contain more information about Fulgent, its business, and the risks affecting its business.
Investor Relations Contact:
The Blueshirt Group
Melanie Solomon; melanie@blueshirtgroup.com
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Founded in 2011 | Located in Los Angeles, CA | NASDAQ:FLGT Investor Presentation November 7, 2022 Exhibit 99.3
Disclaimer Forward-Looking Statements and Market Data This presentation contains forward-looking statements, which are statements other than those of historical facts and which represent the estimates and expectations of Fulgent Genetics, Inc. (the “Company”) about future events based on current views and assumptions. Examples of forward-looking statements made in this presentation include, among others, those related its anticipated growth and positioning, addressable market estimates, the Company’s mission and strategies, the success of its business model and strategy, anticipated future revenue and guidance, evaluations and judgments regarding the Company’s business, products, technologies, competitive landscape, scalability, plans regarding development and launch of potential future products, and any businesses the Company may seek to acquire or has acquired, including statements regarding Inform Diagnostics, CSI Laboratories, Helio Health, and any potential synergies. The Company’s views and assumptions on which these forward-looking statements are based may prove to be incorrect. As a result, matters discussed in any forward-looking statements are subject to risks, uncertainties and changes in circumstances that may cause actual results to differ materially from those discussed or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from those implied by forward-looking statements are disclosed under “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s reports filed with the Securities and Exchange Commission ("SEC"), including its annual report on Form 10-K filed on February 28, 2022, and other reports it files from time to time. Because of these factors, you should not rely upon forward-looking statements as predictions of future events. The forward-looking statements in this presentation are made only as of the date hereof, and, except as required by law, the Company assumes no obligation to update any forward-looking statements in the future. The company’s reports filed with the SEC, including its annual report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 28, 2022 and the other reports it files from time to time, including subsequently filed quarterly and current reports, are made available on the company’s website upon their filing with the SEC. These reports contain more information about the company, its business and the risks affecting its business, as well as its results of operations for the periods covered by the financial results included in this press release. This presentation also includes market data and forecasts with respect to the industry in which the Company operates. In some cases, the Company relies upon and refers to market data and certain industry forecasts that have been obtained from third-party surveys, market research, consultant surveys, publicly available information and industry publications that the Company believes to be reliable. These data and estimates involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Non-GAAP Financial Measures This presentation contains certain supplemental financial measures that are not calculated pursuant to U.S. generally accepted accounting principles (“GAAP”). These non-GAAP measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation of non-GAAP measures to GAAP measures is contained in this presentation.
Mission, Core Values, and Strategy Mission Develop flexible and affordable genomic testing that improves the everyday lives of those around us Core Values Innovation Customer service and commitment Quality Efficiency Strategy Leverage our proprietary NGS platform for broad application Operational excellence Disciplined M&A We are a premier global, technology-based genetic testing company focused on transforming patient care in oncology, infectious and rare diseases, and reproductive health
Leadership Team Esteemed background in molecular science and pathology Most recently Chief Medical Officer at NeoGenomics; prior senior role at Clarient. Chairman Emeritus of Pathology at City of Hope National Medical Center Brandon Perthuis Chief Commercial Officer Dr. Lawrence Weiss Chief Medical Officer Ming Hsieh Chief Executive Officer Dr. Harry Gao Lab Director and Chief Scientific Officer James Xie Chief Operating Officer Paul Kim Chief Financial Officer Extensive experience leading genetic testing commercialization programs since 2003 Previously VP of Sales and Marketing of the Medical Genetics Laboratory at Baylor College of Medicine Prior to Baylor, held senior roles at PerkinElmer and Spectral Genomics B.S. in Biomedical Science Responsible for managing all global operations, product vision and product engineering Served as an SVP of Cogent B.A. in Engineering, M.S. in Industrial Engineering and an M.S. in Computer Science Experienced financial leader and Certified Public Accountant Previously CFO of Cogent Systems; sold to 3M for $943M in 2010 B.A. in Economics from University of California at Berkeley Previously Lab Director at City of Hope Clinical molecular genetics training fellowship and post-doctoral fellowship at Harvard Medical School M.S. in Immunology, and M.D. and Ph.D. in Microbiology, Immunology, and Medical Genetics Experienced operational leader, entrepreneur and philanthropist Previously CEO, President, and Chairman of Cogent Systems Member of the National Academy of Engineering; Fellow of the National Academy of Inventors; Trustee of USC
Dr. Larry Weiss Ming Hsieh Paul Kim James Xie Dr. Harry Gao History of Fulgent Genetics Vision of being one-stop shop for genomic testing Integrating acquisitions and partnerships Capital deployment in M&A opportunities Disciplined execution with expanding team 2011 2022 & Beyond 2020 2021 2015-2019 Founded with initial focus on pediatric rare disease Women’s health and prenatal testing added Launched Picture, at-home genetic test offering Launched JV with Xi Long in China Nasdaq IPO Tests for oncology, cardiovascular, and neurological disorders added Combined technology approach from Cogent with genetics expertise from the City of Hope Launched COVID-19 testing Opened lab in Houston, TX Rapid Expansion enabled by proprietary technology platform Awarded CDC contract to study variants Awarded multiple testing contracts from a variety of States Brandon Perthuis Acquired controlling ownership of Chinese JV Second Oncology Lab in Southern California
Well positioned to execute on a growth strategy that includes organic and inorganic initiatives, including: Transformational acquisition of Inform Diagnostics Ramping and integration of capabilities of CSI Labs Scaling partnerships – Helio Health and Spatial Genomics Potential future acquisitions with a strategy of short and long term ROI, tangible synergies and efficient capital deployment Fulgent is Positioned to Execute on Our Growth Strategy Proprietary technology platform allows for rapid scaling of a broad, flexible test menu 18,400+ Genes | 900+ Panels | Customizable Offerings $106M Q3 Revenue 952,000 Q3 Billable Tests +110% Q3 YoY Core Revenue Increase Next-generation sequencing (NGS) platform complemented with growing portfolio of emerging testing technologies with a focus on oncology
Inform Diagnostics Acquisition Inform Diagnostics Strategic Highlights Test Menu Expansion: Acquisition extends Fulgent’s capabilities into the pathology testing market Commercial Synergies: With the addition of Inform Diagnostics’ extensive testing capabilities, nationwide salesforce, and significant managed care contracts, Fulgent is better positioned to become a one-stop shop for diagnostic services throughout the healthcare continuum and across the U.S Managed Care Relationships: Extends Fulgent’s in-network relationships with managed care organizations to over 300 million covered lives Geographic Reach: Expands Fulgent’s geographic footprint with the addition of CLIA, CAP, and NY State certified laboratories in New York, Arizona, Massachusetts, and Texas Attractive Financial Profile: Transaction has the potential to contribute meaningfully to Fulgent’s annual core revenue and is expected to have a positive impact to pro forma EBITDA Core Products and Services Portfolio Breast Pathology: Full spectrum of care, including services for interventional radiologists, breast surgeons, and breast oncologists Dermatopathology: Fellowship trained dermatopathologists Gastrointestinal Pathology: GI pathologists have a collective 500 years of post-training pathology experience and 1,500 peer reviewed studies between them Hematopathology: Is a subspecialty whereby each member of the Company sees >1,000 bone marrow specimens each year Neuropathology: Offers specialized neuropathology testing services Urologic Pathology: Is comprised of subspecialists that specialize in areas such as prostate, bladder/urinary tract, and testis pathology Operates anatomic pathology laboratories that provide diagnostic services in the fields of breast health, dermatology, GI, hematology, neuropathology, urology, and COVID-19 Founded in 1996 and headquartered in Irving, Texas 500+ Preferred Provider Agreements; 70-80% in-network CLIA-certified and CAP-accredited laboratories ~20 Sales Professionals ~550 total employees
CSI Laboratories Acquisition CSI Laboratories Strategic Highlights Enter High Value Markets: Expansion into somatic genetic testing market, which is expected to grow to $16.8 billion by 2030 Revenue Synergy Opportunities: Leveraging Fulgent’s best-in-class technology and Next Generation Sequencing (“NGS”) expertise in new oncology markets Geographic Footprint: Geographic expansion of CSI’s reach beyond the Southeastern part of the United States Specialized Personnel: CSI’s team includes laboratory industry veterans, a salesforce with deep relationships, and oncology-focused scientific expertise Core Products and Services Portfolio Flow Cytometry Cytogenetic Analysis Fluorescence in-situ hybridization (FISH) Immunohistochemistry Molecular genetics Consultations in hemopathology and surgical pathology Specialized cancer diagnostics laboratory focused on meeting the needs of pathologists and community hospitals Founded in 1997 and headquartered in Alpharetta, Georgia Offers more than 400 unique tests with a focus on oncology CLIA-certified and CAP-accredited laboratory Profitable with quality customers, reimbursement contracts, and established service offerings Sales team focused in the South-Southeast United States
Target Market Opportunity Cancer Diagnostics $80B market1 Market sizes sourced from Wall Street equity research Market size sourced from Frost & Sullivan Market size sourced from Research and Markets, April 2022 Genes & Panels Tumor Profiling Known Mutation Newborn Genetics Hereditary Cancer Carrier Screens Genomic Testing Sequencing Service Infectious Disease Spatial Biology $18B market1 Early Detection / Liquid Biopsy Reproductive Health $7B market2 Anatomic Pathology Capabilities Services Include: Breast pathology Gastrointestinal pathology Dermatopathology Urologic pathology Neuropathology Hematopathology Substantial Geographic Footprint Provides services to 1,300 clients representing 2,700 physicians across the United States Expansive in-network relationships with over 300 million covered lives Pharma Services $50B market3
Building Fulgent’s Platform and Capabilities Cancer Diagnostics Reproductive Health Early Detection / Liquid Biopsy Genes & Panels Tumor Profiling Known Mutation Newborn Genetics Hereditary Cancer Carrier Screens Genomic Testing Sequencing Service seqFISH Technology Comprehensive Diagnostics Platform Anatomic Pathology Infectious Disease Spatial Biology
What Sets Fulgent Apart? Represents genes covered by single-gene tests. For Q3 2022. Includes all tests available for sale (e.g., Whole Exome, Whole Genome, Large Panels, Small Panels, Comprehensive and Focus Cancer Panels and Single-Gene Tests, COVID-19 Tests, and vaccines). Also excludes stock-based compensation. See GAAP reconciliation. Technology Platform A New Approach to NGS Proprietary probes and engineered chemistry Comparison and Suppression Algorithms Comprehensive analytics powered by AI and ML Extensive Test Menu Superior Cost Structure And a Better Cost Structure Average COGS per Test: $60 (2) Lab efficiencies, automation and scale have translated to a sustainable cost structure Partnerships create leverage with sales and marketing Process 100% of volume without the need for outsourcing Leads to a Broader Test Menu 18,400+ single-gene tests (1) 900+ panels Whole Genome and Exome Flexibility enables custom tests for any genes or conditions Preset panels have grown 350% since IPO in 2016
Proprietary Technology Platform Differentiated Technology... Engineered genetic biochemistry, including reagents and probes Data suppression and comparison algorithms Adaptive learning software Automated reporting …Provides a Multitude of Advantages Broad test menu Ability to rapidly develop and launch new tests Customizable test offerings Lower costs per billable test High efficiency Clinical Workflow for: Cancer Carrier Exome Genome Mito Somatic Other Web Services for: Patients and Providers Fulgent and Picture Websites Research Portal Benefit Analysis Sequencing Services: WSG/WES RNA Oncology Single Cell Methylation Mitochondrial Rent-a-lane Lab Workflow: Wet Lab Auto Lab BioBank Record Management: Patient Record FulgentDB Pipeline Services: Germline Somatic Custom Dry Lab Service Data Analysis Curation Cloud: Report Editor Curation Warehouse Curation Tools Curation Content
Commercialized Commercialized COVID-19 Testing Specialized Oncology Testing Core NGS Recent Traction with: Hereditary Cancer Cardiovascular Genetics Reproductive Health Neurodegenerative Genetics Newly launched pharmacogenetic test Aggressively expanding sales and commercial organization Wide Array of Technologies Services Include: Flow cytometry Cytogenetic analysis Fluorescence in-situ hybridization (FISH) Immunohistochemistry Molecular genetics Consultations in hematopathology and surgical pathology NGS Fulgent’s Broad Capabilities COVID NGS Research driven platform working with local and federal government on genomic studies CDC contract awarded Fulgent worth up to $47M to study SARS-CoV-2 using Fulgent’s NGS platform Capacity of 10,000 NGS tests per day Used to identify new strains and mutations Primarily RT-PCR Based Testing Contracts with: School systems Nursing homes Athletic organizations Specialty health clinics Travel organizations Government agencies Offered through: Drive through sites Picture at-home kits Managed on-site programs Next Generation Sequencing Opportunities Comprehensive Anatomic Pathology Services Broad Anatomic Pathology Capabilities Breast pathology Gastrointestinal pathology Dermatopathology Urologic pathology Neuropathology Hematopathology Managed care contract network and physician relationships will be leveraged to provide diagnostic products and services complementary to Fulgent’s portfolio Expansive geographic presence with several CLIA-licensed laboratories across the United States
For Q3 2022. Includes all tests available for sale (e.g., Whole Exome, Whole Genome, Large Panels, Small Panels, Comprehensive and Focus Cancer Panels and Single-Gene Tests, COVID-19 Tests, and vaccines). Also excludes stock-based compensation. See GAAP reconciliation. Fulgent’s Menu is Scalable and Affordable to Customers Large Panel Small Panel Focus Panel Single-Gene / Custom Comprehensive Panel Average Sales Price / Test Whole Genome Whole Exome Q3 ’22 Average Sales Price / Test: ~$111 Q3 ’22 Average COGS / Test: ~$60(1) Clinical Exome GREATER OFFERINGS THAN COMPETITORS CNV+ MANY COMPETITORS DO NOT OFFER Flow Cytometry FISH Histopathology Cytogenetics Molecular
NGS Testing – Offerings Site-Specific Testing Known Mutation Focus (30 Genes) Comprehensive (127 Genes) Somatic Cancer Panels 19 Panels Repeat Expansion 18,400+ Genes Single Gene 900+ Panels Customizable Panels Disease Panels Clinical Exome (4,500+ Genes) Whole Exome Exome Tests
NGS Testing – Germline Oncology Test Menu Fulgent Focus Cancer Panels Fulgent Comprehensive Cancer Panels Customizable: Add additional cancer genes or panels at no charge Genes: 30 Methods: NGS & Del/Dup Coverage: 99% at 50x Del/Dup ≥ 1 Exon TAT: 2 – 3 Weeks Customizable: Add additional cancer genes or panels at no charge Methods: NGS & Del/Dup Genes: 127 Coverage: 99% at 50x Del/Dup ≥ 1 Exon TAT: 2 – 3 Weeks Focused Comprehensive
FISH Oncology Testing Platforms Expansive heme and solid tumor menu STAT testing available PML/RARA <1 day TAT CD138 cell enrichment for PCM 3-5 Day turnaround time 225+ stains Platform agnostic Roche, Agilent and Leica IHC Three levels of service – Tech, Global, Consultative PD-L1 - Various IVD platforms and indications <1 to 2 Day turnaround time HISTOLOGY Hematology and solid tumor menu Extensive single gene menu NGS 5-7 day turnaround time [NGS 10-14 days] MOLECULAR 10-color platform Comprehensive panel design High-sensitivity for paroxysmal nocturnal hemoglobinuria Expert analysis and interpretation 12-24 hour turnaround time FLOW CYTOMETRY Oncology and constitutional >20% abnormality detection rate Mitogen stimulation/dual culture DSP30 (detection of B-cell disorders) Interleukin 4 for plasma cell myeloma Phytohemagglutinin and Interleukin 2 (detection of T-cell disorders) Children’s Oncology Group approved 5-7 Day turnaround time CYTOGENETICS
The Focus Carrier screen is a pan-ethnic screen that looks for pathogenic mutations known to cause autosomal recessive and X-linked disorders Gene Count: 30 The Ashkenazi Jewish carrier screens for pathogenic carrier variants known to cause recessive genetic disorders Gene Count: 61 The ACOG/ACMG panel screens for common genetic disorders seen in the general population Gene Count: 6 The Expanded Panel with “opt-in” genes, these 9 genes are associated with mild or adult-onset presentation disease Gene Count: 436 The Expanded Panel screens for more than 400 recessive and X-linked conditions that covers people of all ethnic backgrounds Gene Count: 427 NGS Testing – Panel Deep Dive Largest panel available, covering over 400 conditions NGS of entire genes, not just hotspots Deletion and duplication analysis TAT: 2 – 3 weeks Beacon Carrier Screening Beacon ACOG / ACMG Guidelines Panel Beacon Ashkenazi Jewish Panel Beacon Focus Panel Beacon Expanded Panel Beacon Expanded + Opt-in Genes Comprehensive Beacon Carrier Screening Tests
NGS Testing – Women’s Health: PGT-A Increased Chance of Pregnancy Embryos with a normal number of chromosomes have a better chance of resulting in successful pregnancy More Confidence in Transferring a Single Embryo Avoid health risks associated with twin or triplet pregnancies that can occur from multiple embryo implantation Reduced Risk of Miscarriage Embryos with an abnormal number of chromosomes (aneuploid) typically do not result in successful pregnancy or may result in birth defects Fewer Number of Embryo Transfer Cycles Needed Reduce the amount of time to pregnancy and the costs of additional IVF cycles PGT-A Can Expand a Patient’s Prospects of a Successful Pregnancy Preimplantation Genetic Testing for Aneuploidy (PGT-A) can identify potentially abnormal embryos for transfer in IVF, thereby expanding a patient’s prospects of a successful pregnancy Women 35+ Who is PGT-A testing for? Those who have experienced miscarriages Those who want to reduce the likelihood of having multiples Couples experiencing male factor infertility Those who have experienced IVF failure
NGS Testing – Rapid Whole Genome for Newborns Screens for over 200 health conditions Identifies potential health risks before symptoms arise Early detection known to have a positive impact Simple cheek swab collection for your baby : No pricks, sticks, or tears necessary Newborn Genetic Screening Goes Beyond Standard Newborn Screening Multiple congenital anomalies Inborn errors of metabolism Immunodeficiency Respiratory distress Epilepsy Ideal for Infants Experiencing: 20 out of the 35 infants (57%) received dx 13 out of the 20 dx infants (65%) had clinical usefulness for treatment In a Retrospective Analysis of Diagnostic and Clinical Finding with 35 Acutely Ill Infants (2015): TAT of 7 - 10 Days Designed for critically ill infants in the NICU or PICU to rapidly diagnose genetic disorders
Parenting Carrier test that screens for genes associated with 30 genetic conditions Newborn Screens newborns for genes associated with various genetic conditions Wellness Screens adults for genetic variants that indicate disease risk PD Aware Assesses risk for Parkinson's Disease COVID-19 Infection Test At-home collection kit for RT-PCR test for COVID-19 Consumer Initiated Tests – Picture Genetics Targeting the Large Consumer Market with Picture Genetics Launched in 2019 with significant growth amid COVID-19 A consumer-focused offering that merges clinical utility with accuracy of an accredited lab Extends Fulgent’s NGS capabilities to a broader market Validated by successfully scaling to several million billable tests performed within months for COVID-19, after receiving an EUA Performs a complete sequencing (vs genotyping) analysis for better, more accurate results Patient-friendly with easy to use “order from home” model – no doctor visits or insurance necessary, though many tests are eligible for reimbursement Full service offering that includes analysis and genetic counseling support COVID-19 Antibody Test Neutralizing antibody test for COVID-19
Summary Financial Performance $56M Core Revenue1 in Q3’22 $297M LTM Operating Cash Flow as of Q3’22 ~484,000 LTM Core Tests as of Q3’22 110% growth year-over-year ~185% growth year-over-year ($ in thousands) +101% year-over-year Core Revenue excludes NGS COVID-19 test volume
Financial Performance: Revenue Profile ($ in thousands) (in thousands) ($ in thousands) (in thousands) Core Revenue excludes NGS COVID-19 test volume
Figure is not in accordance with GAAP because it does not include equity-based compensation, amortization, restructuring cost, and acquisition-related costs. (1) Financial Performance: Margin Profile (1) (in thousands) (1)
2022 Financial Guidance Q4 2022 Full Year 2022 Change from Prior Quarter RT-PCR COVID-19 $8 M $433 M - $47 M NGS COVID-19 (CDC) Fulgent Core NGS $52 M + 86% y/y1 $178 M + 92% y/y1 - $7 M CSI and Inform Diagnostics Contributions Total $60 M -76% y/y $611 M -38% y/y - $54 M COVID Core Core Revenue excludes NGS COVID-19 test revenue for more accurate year over year comparison purposes.
Balance Sheet
Non-GAAP Financial Adjustments
Founded in 2011 | Located in Los Angeles, CA | NASDAQ:FLGT
Founded in 2011 | Located in Los Angeles, CA | NASDAQ:FLGT Announces Third Quarter 2022 Earnings and Acquisition of Fulgent Pharma November 7, 2022 Exhibit 99.4
Disclaimer Forward-Looking Statements and Market Data This presentation contains forward-looking statements, which are statements other than those of historical facts and which represent the estimates and expectations of Fulgent Genetics, Inc. (the “Company”) about future events based on current views and assumptions. Examples of forward-looking statements made in this presentation include, among others, those related its anticipated growth and positioning, addressable market estimates, the Company’s mission and strategies, the success of its business model and strategy, anticipated future revenue and guidance, evaluations and judgments regarding the Company’s business, products, technologies, competitive landscape, scalability, plans regarding development and launch of potential future products, and any businesses the Company may seek to acquire or has acquired, including statements regarding Fulgent Pharma Holdings, Inc. (“Fulgent Pharma”), Inform Diagnostics, CSI Laboratories, Helio Health, and any potential synergies, or transformation of the Company’s business, long-term visions and strategies, included, with respect to Fulgent Pharma, those designated to create a vertically integrated solution for cancer care, the clinical development of Fulgent Pharma’s pipeline and related statements and assumptions regarding development timelines, any potentially accelerated pathway for regulatory approval, the potential safety and efficacy of the nano-drug delivery platform and any related therapeutic candidates, the potential market size for these candidates and platforms and the value of available data, including genomic data. The Company’s views and assumptions on which these forward-looking statements are based may prove to be incorrect. As a result, matters discussed in any forward-looking statements are subject to risks, uncertainties and changes in circumstances that may cause actual results to differ materially from those discussed or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from those implied by forward-looking statements are disclosed under “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s reports filed with the Securities and Exchange Commission ("SEC"), including its annual report on Form 10-K filed on February 28, 2022, and other reports it files from time to time. Because of these factors, you should not rely upon forward-looking statements as predictions of future events. The forward-looking statements in this presentation are made only as of the date hereof, and, except as required by law, the Company assumes no obligation to update any forward-looking statements in the future. The company’s reports filed with the SEC, including its annual report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 28, 2022 and the other reports it files from time to time, including subsequently filed quarterly and current reports, are made available on the company’s website upon their filing with the SEC. These reports contain more information about the company, its business and the risks affecting its business, as well as its results of operations for the periods covered by the financial results included in this press release. This presentation also includes market data and forecasts with respect to the industry in which the Company operates. In some cases the Company relies upon and refers to market data and certain industry forecasts that have been obtained from third-party surveys, market research, consultant surveys, publicly available information and industry publications that the Company believes to be reliable. These data and estimates involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Non-GAAP Financial Measures This presentation contains certain supplemental financial measures that are not calculated pursuant to U.S. generally accepted accounting principles (“GAAP”). These non-GAAP measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation of non-GAAP measures to GAAP measures is contained in this presentation.
Ming Hsieh Chairman, CEO, Founder
Transaction Overview Genes & Panels Tumor Profiling Known Mutation Newborn Genetics Hereditary Cancer Carrier Screens Genomic Testing Sequencing Service Infectious Disease Spatial Biology Fulgent Genetics acquired all outstanding capital stock of Fulgent Pharma at an enterprise value of $100 million, in a combination of Fulgent common stock and cash Closing was November 7, 2022 Fulgent gains access to novel nano-drug delivery platform with US FDA DMF Lead drug candidate ready for Phase II/III clinical trials Strong oncology pipeline using the same delivery platform with shortened development time 32 issued and 4 pending patents Acquired a talented scientific team with proven track record Transforms FLGT from a genomic testing/service business into a fully integrated precision medicine company to address continuum of cancer care Nanoencapsulation Platform Technology with Lead Asset FID-007 Initial Target Indications: H&N, Pancreatic, Breast, and Lung Cancer
Fulgent Pharma and Fulgent Genetics combined entity positioned to unlock significant long-term upside for both the therapeutics and diagnostic businesses while effectively managing risk Fulgent Genetics + Fulgent Pharma History 2011 Fulgent Therapeutics founded as combined pharma and genetics company focused on oncology 2018 2019 2020 2021 2022 2017 2016 Fulgent Therapeutics separates into Fulgent Genetics and Fulgent Pharma; Fulgent Genetics completes IPO and Fulgent Pharma remains a standalone private company 2022 Fulgent Genetics acquires Fulgent Pharma Builds one of the broadest genetic test menu on the market with superior cost structure Expanded operational capabilities and market reach Acquisitions and Strategic Investments provide tools for drug discovery Began Phase 1 studies of FID-007 Worldwide key patents secured (32 issued and 4 pending) Proof of concept achieved for Nano-drug delivery platform in preliminary Phase 1 clinical testing (findings presented at ASCO 2021) Multiple potential clinical indications identified for FID-007 Nano Drug Delivery System DMF accepted and listed as available by the FDA Developed additional drug candidates using the same drug delivery platform
Strategic Vision – A One-stop Solution for Cancer Care VISION Leading Genetic Testing Company Offering Tech-Enabled Diagnostic Solutions Therapeutic and Diagnostic Entity Providing Comprehensive Solutions Across the Cancer Care Continuum Vertically integrated “one-stop” solution across the healthcare chain following the CSI, Inform Diagnostics, and Pharma acquisitions Proprietary nano drug delivery technology platform serves as an underpinning technology between diagnostic and pharm to help create a more sustainable and profitable business model in precision medicine for years to come Addition of a talented scientific team creates a strong synergy and competitive advantage that may be leveraged across the combined business Potential near-term opportunity includes shortened 505(b)(2) drug development and commercialization timelines and potential long-term opportunity leverages large data insights and novel analytical tools from diagnostics business to enable additional precision medicine pipeline through organic or partnered development strategies Commitment to continue growing diagnostic and therapeutic opportunities through organic investments and M&A Seasoned management team along with strong cash position allow Fulgent to enter therapeutic opportunities while managing risk To build a vertically integrated solution to combat cancer early detection | clinical diagnostics | post treatment monitoring | drug discovery and cancer treatment Exciting Cancer Therapeutic Opportunity Realizing Precision Medicine Potential Nano-Drug Delivery Platform
Long-Term Vision: Fulgent Continuum of Care Diagnosis Well-funded by diagnostics to advance H&N therapy trials and commercialization process Genomics data accelerates pipeline therapeutics development, e.g. spatial biology for tumor micro-environment profiling Long-term opportunity to leverage data insights from diagnostics to enable precision medicine through proprietary or partnered development strategies Manufacturing capability to aid drug development Transforms from a service company to a combined diagnostic and therapeutic company focused on precision medicine Large oncology market opportunity Careful pipeline management will responsibly engage therapeutic opportunities while managing potential risks Valuable, diverse assets and future sustainable revenue and margins Therapy Database + Drug Discovery + Patient Care
Potential Market Opportunity Pancreatic $1.1B in 2021 $1.5B by 2035 NSCLC $121M in 2021 $140M by 2035 Breast $498M in 2021 $521M by 2035 H&N $2.2B in 20211 $2.9B by 20351 Note: U.S. opportunity shown Sources: Evaluate Pharma and Wall Street research estimates H&N market opportunity for both 2nd line and 3rd line therapy Colon $6.5B in 2021 $8.6B by 2035 Initial Indication Subsequent Indications
Dr. Ray Yin, Ph.D. Co-Founder of Fulgent Therapeutics President of Fulgent Pharma Founder & CEO, ANP Technologies, Inc. Former Team Leader of Nanobiotechnology for Chem/Bio Defense, U.S. Army Research Laboratory Holder of 46 drug delivery/detection patents
Nano-Drug Delivery Platform Overview Many drug candidates failed during preclinical and clinical development and testing due to poor water solubility Nanoencapsulation produces amorphous drug candidates with improved solubility and potentially enhanced absorption, drug PK profiles, safety and efficacy Broadly applicable to both IV and oral drug delivery formulations Potentially shortened development time Plug and play drug delivery platform provides multiple shots on goal Simple and low-cost production process Novel Nano-Drug Delivery Platform Soluble in both water and various organic solvents and capable of hot melt mixing with APIs
FID-007 Program Overview FID-007 Phase I Preliminary Highlights (as of 6/10/22): H&N Cancer 100% Disease Control Rate (DCR1) and 33% Overall Response Rate (ORR) were observed in 6 heavily treated H&N patients Ampullary/Pancreatic 75% DCR and 50% ORR were seen in 4 heavily treated ampullary and pancreatic patients Immune Checkpoint Inhibitors (ICIs) Resistant Patients 67% DCR and 33% ORR were seen in 6 heavily treated patients of different types of cancer with PD-1 or PD-L1 antibody treatment as the last line prior to enrollment in FID-007 trial Anticipate more data to be published in 2023 FID-007 Phase I First in Human Clinical Trial – Preliminary Findings Dose levels up to 125 mg/m2/week with manageable safety profile, without yet reaching MTD Dosing at 160 mg/m2/week is ongoing There is preliminary evidence of anti-tumor activity in heavily pre-treated patients across different tumor types Partial clinical data presented at ASCO 2021 Note: all findings are preliminary DCR includes Stable Disease (SD), Partial Response (PR), Complete Response (CR)
FID-007 and Other Candidates Using our Nano Delivery Platform FID-007 Drug Candidates Pre-Clinical Wholly-owned drug candidate focused on Head & Neck (H&N), Pancreatic, Lung, and Breast Cancer Seeking initial therapeutic indication for 2nd or 3rd line treatment of H&N cancer Exploring potential ampullary or ICI resistant Small molecule therapy uses proprietary nanoencapsulation technology, which may help mitigate toxicity while maintaining tumor reduction efficacy Potential FDA approval strategy uses 505(b)(2) studies, which may shorten clinical trial process and accelerate timeline to commercialization Target Indication Milestones Cytotoxic Potential BE to Abraxane (505(b)(2)) Head and Neck (H&N) (505(b)(2)) Begin P2 Enrollment 2024 Present P1 Data 2023 Begin P2/3 Enrollment 2023 Pre-IND Colon and others FID-022 Cytotoxic Ampullary or ICI Resistant (505(b)(2)) Go/No-go Based on BE Study Pre-IND Vaccine Adjuvant FPS-002 STING Agonist Clinical P1 Clinical P2 Clinical P3 IND-enabling Study in 2023 IND Submission 2024 Potential Partnership
Preclinical Pipeline Robust Pipeline Focused on Unmet Needs in Oncology Genomic Database Fuels Development and Addresses Issues of Drug Resistance Drug Candidates Target Indication FID-021 Undisclosed Multiple Cancer FID-023 Undisclosed Leukemia FID-025 Undisclosed Brain Cancer 505(b)(2) Approach NCE Approach Drug Candidates Target Indication FPT-020 Multi kinase inhibitor Gastric, Colon, Bladder, Endometrial Cancer FPT-006 Multi kinase inhibitor Leukemia FPB-001 BMI1 inhibitor Brain Cancer
Ming Hsieh Chairman, CEO, Founder
Key Takeaways Transaction reinforces Founder vision and potentially transforms the existing business into a new paradigm, generating a creative and sustainable business model in precision medicine for years to come “One-stop” shop verticalized across the healthcare chain and Fulgent Genetics’ increased customer base following the CSI, Inform Diagnostics, and Pharma acquisitions Initial therapeutic indication for 2nd or 3rd line treatment of Head & Neck (H&N) cancer has potential to provide an attractive entry point, rapid commercialization track, and a path to profitability in the therapeutic segment Long-term opportunity to leverage data insights from diagnostics business to enable precision medicine through proprietary or partnered development strategies Commitment to continue growing diagnostic and therapeutic opportunities through organic investments and M&A
Third quarter 2022 financial results
Brandon Perthuis Chief Commercial Officer
Paul Kim Chief Financial Officer
Q&A
Founded in 2011 | Located in Los Angeles, CA | NASDAQ:FLGT