Somagen Raises Funds Through IPO... Utilizing DTC Marketing

Rapid Growth of Direct-to-Consumer (DTC) Genetic Testing Market
Additional $9.67 Million Revenue Expected in 2023 from New DTC Businesses

[Asia Economy Reporter Hyungsoo Park] Somagen, a subsidiary of Macrogen, is entering the domestic stock market. The funds raised through the initial public offering (IPO) will be used to increase market share in the rapidly growing personal genome analysis service market. Somagen expects to achieve sales of $9.67 million in 2023 through its direct-to-consumer (DTC) genetic testing business.

According to the investment banking (IB) industry on the 3rd, Somagen will conduct a demand forecast for institutional investors over two days from the 7th to the 8th. Based on the demand forecast results, the public offering price will be finalized, and public subscription for general investors will be held on the 13th and 14th. The scheduled listing date is the 26th, with Shinhan Financial Investment as the lead underwriter.

Somagen is a genome analysis company established by Macrogen in 2004 in Rockville, Maryland, USA. It provides genome analysis service solutions such as Sanger sequencing (CES), next-generation sequencing (NGS), direct-to-consumer genetic testing (DTC), and microbiome analysis. Based on its experience participating in major U.S. government projects, it maintains a market share of around 10% in the U.S. NGS service market.

Somagen’s commercialized personal genome analysis services are broadly divided into two types. They provide relative disease risk information by analyzing genotypes or offer customized health information to improve quality of life. They analyze gut microbiota composition, which has been found to directly or indirectly affect diseases such as obesity, atopy, depression, and cancer, and monitor changes in gut health.

As the paradigm of disease management shifts from treatment to prevention, the importance of genome analysis services provided by Somagen is increasing. Personalized medicine, which develops early diagnosis, prevention, and treatment of diseases based on individual genome information, can improve quality of life.

Demand for direct-to-consumer genetic testing, where consumers directly request genetic testing services related to their health and disease risk without going through medical institutions such as hospitals, is increasing. In the U.S., DTC services are available in 35 states. The DTC market size is expected to grow from $824 million in 2018 to $6.365 billion in 2028, with an average annual growth rate of 22.7%. The U.S. accounts for 47% of the global DTC market.

Somagen has established facilities providing DTC services in Virginia, USA, and started services in October last year. It currently has laboratories and equipment capable of processing 150,000 samples annually. Due to the nature of the service, marketing to inform the general public is important.

Somagen will invest 20 billion KRW of the funds raised through the IPO in marketing expenses. Additionally, 8.5 billion KRW will be spent to recruit professional personnel. Of the public offering funds, 13 billion KRW will be used to repay borrowings and financial lease liabilities.

The desired public offering price band is 13,700 to 18,000 KRW, and the size of the public offering amount is 75.6 billion KRW based on the upper end of the band.