Covid testing biotech Prenetics merges with US Spac in $1.25bn deal

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The biotechnology start-up whose Covid-19 tests helped the English Premier League play through the pandemic has merged with a US-listed special purpose acquisition company, becoming Hong Kong’s first “unicorn” to list.

The deal to absorb Prenetics into the Nasdaq-listed Artisan Acquisition blank cheque company, valued the genome and diagnostics biotech at $1.25bn. In addition to the funds already raised by the Artisan Spac, which will be renamed Prenetics, the deal gives the entity a combined equity value of $1.7bn.

The deal is expected to close in the fourth quarter of this year or the first quarter of 2022.

Prenetics, which was founded by the Hong Kong entrepreneur Danny Yeung in 2014 and received early investment from Alibaba, has built a reputation around genome testing and disease diagnostics, areas where it sees multibillion-dollar global opportunities. 

Its fortunes were transformed by the global health crisis, specifically thanks to the company’s role in “project restart”, the English Premier League’s efforts in May 2020 to resume competition despite a lockdown and avoid an estimated $1bn hit from cancelling the entire season. 

The league hired Prenetics to manage the regular testing regime for players and staff, a deal that contributed to the Hong Kong company generating $65m in revenues in 2020 and a forecast of $205m in 2021.

Other revenue streams included providing one-stop lab testing services for Hong Kong and Heathrow airports and IWG, the world’s largest flexible office company.

Yeung described the deal, which followed a decision not to list locally, as a “monumental moment” for Hong Kong start-ups. Prenetics will become the first “unicorn” — or start-up with a listed market value of more than $1bn — from Hong Kong, paving the way for others to follow a route to list outside the Chinese territory.

Artisan is backed by Adrian Cheng, chief executive of Hong Kong property and infrastructure conglomerate New World Development, who established the Spac to seek out companies in healthcare-related sectors with optimistic growth prospects in the greater China region.

People close to the company said that Prenetics had been in discussions with “dozens” of other Spacs before settling on the deal with Cheng.

Prenetics foresees its next stage of growth in the rise in demand for fast, accurate tests administered in homes and offices, on top of continuing testing needs to combat coronavirus outbreaks.

Using technology developed at Oxford university, the company has produced a small device — the Circle HealthPod — that takes $20 disposable tests available from pharmacies and delivers lab-quality diagnostics in about 20 minutes.

The $126 machine, which the company launched last month across New World’s shopping malls, office buildings and residential developments, provides only Covid-19 tests but Prenetics envisages widening its offerings to tests for sexually transmitted diseases.