IPO ... MGRC

Malaysian Genomics Resource Centre Bhd (MGRC) is expected to raise RM18.47 million via its initial public offering (IPO).

The IPO entails a public issue of 17.1 million new shares of 10 sen each and an offer for sale of two million existing shares at an offer price of RM1.08 apiece.

Of the public issue, two million new shares are for public subscription while 14.5 million new shares will be placed out to selected investors. Another 600,000 new shares are for subscription by eligible directors.

Despite its unconventional business, Malaysian Genomics Resource Centre Bhd (MGRC), which is to list on Bursa Malaysia ’s ACE Market on Oct 5 2010, has attracted interests from “high net-worth individuals” and fund management firms for its private placement of 16.5 million shares, or 17.5% stake of its enlarged share capital, as part of its listing exercise.

 

These investors also included venture capitalist funds which have been with the contract genomics services provider since the beginning. The company was started in 2004.

Khazanah Nasional Bhd is deemed to be a major shareholder of MGRC, together with MGRC’s managing director Robert Hercus and executive director Munirah binti Abdul Hamid. Before the IPO, Khazanah’s deemed interest in MGRC was 88.6%. This was diluted to 70.3% after the IPO.

MGRC provides bioinformatics solutions and analysis services in the area of genome studies. Its core areas of business are contract genomics services, which contributed 71.86% to top line in FY2009 (FY ends May 31 2010), and genomics data access services, which contributed 28.14% in the same period.

 

Some of its major clients included the Brigham & Women’s Hospital, which is a teaching affiliate of Harvard Medical School , and the Australian Genome Research Facility Ltd. MGRC was also tasked to do the assembly and analysis of oil palm genome for Sime Darby Technology Centre Sdn Bhd.

MGRC’s works for Sime Darby is one of the few ongoing research initiatives on oil palm genome in the world. It is believed that the Malaysian Palm Oil Board (MPOB) also conducts such research, in addition to ACGT Sdn Bhd, which is the bio-tech arm of Genting Plantations Bhd. However, it is understood that ACGT only conducts in-house research services.

It is believed that ACGT was established to do its own research with its own objectives to develop intellectual property based on either oil palm or synthetic genomics, whereas MGRC services the international community and biotech industry.

As yet, MGRC do not conduct internal research for developing intellectual property, but they are hoping to start venturing in that direction following its listing. Going forward, MGRC expected the bulk of its revenue to continue to come from its local operations.

MGRC planned to allocate about 37.4% of total proceeds for capital expenditure, which included purchasing next-generation sequencing machines, 24.7% for working capital, 10.8% for marketing expenditure, 8.2% for research and development expenditure and the balance for listing expenses.

The capital expenditure will help it support the growing demand for genome sequencing and analysis services. The purchase of sequencing machines will provide it better control of its delivery timeline and increase our capacity to work on more projects.

Its future plans would see the introduction of new services frequently used in DNA sequencing applications, and the development of proprietary genome databanks. The range of services could be leveraged by scientists to develop targeted solutions for healthcare, crop improvement, energy production, and the environment.

Established in 2004, MGRC is a provider of bioinformatics solutions and analysis services in the area of genomics (the study of genomes). It has two core business divisions, namely Contract Genomics Services, and Genomics Data and Access Services.

MGRC specialises in the analysis of large volumes of DNA sequence data using proprietary analytical pipelines.

The end-results from genomics sequencing and analysis could then be used by researchers and scientists to develop solutions that benefited, among others, the healthcare, agriculture, industrial and environmental sectors.

The company also provides easy access to high-throughput online bioinformatics analysis tools via its portal, www.mgrc.com.my, which is a collaborative effort with Malaysian Biotechnology Corporation Sdn Bhd, to enhance the research, development and commercialisation activities and capabilities for universities and research institutes.

MGRC had provided analysis services for a variety of research for customers across different sectors, namely Brigham & Women’s Hospital, a teaching affiliate of Harvard Medical School (lung cancer genomes) and Australian Genome Research Facility Ltd (marsupial genomes).

Through its holding company, Synamatix Sdn Bhd, MGRC was also tasked with the genomics sequencing and analysis for Sime Darby Technology Centre Sdn Bhd (oil palm genomes) and Universiti Kebangsaan Malaysia (yeast and bacterial genomes).