Early screening and early diagnosis have become a hot topic again in the competition arena. KINDSTAR GLOBAL (09960) has taken the lead in breaking the deadlock by acquiring 100% equity of Benchmark Medical.

In 2020, the early screening and diagnosis of tumors made waves in the capital market and was once hailed as the first year. Now, the industry of early tumor screening and diagnosis has gradually entered the commercialization stage. According to data from the International Agency for Research on Cancer, in 2021, there were approximately 19.29 million new cancer cases globally, with around 9.96 million deaths. China has the highest number of cancer incidence and mortality in the world. It is well known that most malignant tumors show no obvious symptoms in the early stages, and by the time they are discovered, they are usually in the middle or late stages, resulting in a low five-year survival rate. Early tumor screening and diagnosis can significantly reduce cancer mortality, improve quality of life, and lower treatment costs. At the national level, since 2016, the Chinese government has announced several national strategies and goals aimed at increasing screening rates and reducing the incidence and mortality of major cancers. Behind this, early screening and diagnosis work for most domestic cancers is still ongoing, and there is still ample room for development in the industry of early tumor screening and diagnosis. With the increasing diversification of early tumor screening and diagnosis technologies, early tumor screening outpatient clinics are being promoted across the country, and the commercialization of early tumor screening is also in its early stages. Industry cooperation and investment are becoming more frequent than before. Recently, as one of the leading participants in independent clinical special inspections, KINDSTAR GLOBAL (09960) completed a new acquisition. The announcement stated that the company completed the acquisition of approximately 100% of the equity of Benchmark Medical for a total consideration of 31.30 million US dollars, marking a significant merger in the field of early screening and diagnosis. "Potential stock" on the early screening and diagnosis track In recent years, in terms of early tumor screening technologies, in addition to genomics, proteomics, metabolomics, transcriptomics, and multi-omics are gradually being applied. Among them, ctDNA methylation is considered the mainstream and most promising liquid biopsy technology path, with great commercial value. Compared to the pattern of specific site mutations in ctDNA, methylation of ctDNA in cancer often occurs at thousands of CpG sites, making it easier to detect and assess. Therefore, ctDNA methylation testing is superior in both sensitivity and cancer site localization compared to gene mutation testing. It is understood that Benchmark Medical, acquired by KINDSTAR GLOBAL in this acquisition, was established in Guangzhou International Bioisland in 2015 and has set up research and development centers in China and the United States. It is one of the companies in China that first applied high-throughput sequencing technology for ctDNA methylation to early cancer screening. The founder, Fan Jianbing, holds a Ph.D. in Human Genetics from Columbia University in the United States and has nearly 30 years of experience in human genomics, gene chips (Microarrays), and high-throughput sequencing technology development. He was selected for the 2021 "Global top 2% scientist - Lifetime Scientific Influence Rankings." Benchmark Medical focuses on two main lines, "one tube of blood" and "one tube of urine," covering over 70% of high-incidence cancers such as lung cancer, digestive system cancers, and urologic cancers. It spans the entire process of cancer early screening, early diagnosis, recurrence monitoring, and accompanying diagnosis. It is worth mentioning that focusing on technological innovation breakthroughs, Benchmark Medical has taken the lead in products for lung cancer, urologic diseases, gastric cancer, and has developed multiple First-in-Class cancer early screening and diagnosis products. As of now, the company has applied for a total of 80 patents, with 34 patents granted and 46 patents accepted domestically and internationally, making it one of the most promising players in the early tumor screening and diagnosis field. Its non-invasive early diagnosis tool for lung nodules, in collaboration with Academician Zhong Nanshan, conducted a large-scale, multicenter prospective clinical validation of over 10,000 cases through the "Zhongsheng Plan." The product has been recommended for early lung cancer diagnosis in the "Early Lung Cancer Diagnosis China Expert Consensus (2023 Edition)" and has obtained EU IVDD CE product certification, giving it a significant advantage in both clinical application and overseas commercialization. Another urologic cancer early screening product requires only 100mL of random urine for one-time detection of bladder cancer, renal pelvis cancer, and ureter cancer, with performance equivalent to the clinical gold standard (cystoscopy + tissue biopsy). This product is also a First-in-Class product, has received breakthrough device designation (BTD) from the US FDA, conducted LDT commercialization in the US, and obtained Class III medical device registration certificate from the National Medical Products Administration (NMPA) earlier this year. This project won the second prize of the National Science and Technology Progress Award in 2023. Building an ecosystem, strategic integration achieving resource complementarity Currently, the market concentration of China's early tumor screening industry is relatively low, and the main products on the market are based on ctDNA methylation, supporting the main front. At this stage, around the commercialization of the industry, channel integration, and ecosystem creation have become the theme of this stage. This process not only includes strategic alliances between domestic companies, but some companies have also reached strategic cooperation with leading foreign companies to achieve resource complementarity. The acquisition of 100% equity of Benchmark Medical by KINDSTAR GLOBAL is one of the representative events in this regard. For KINDSTAR GLOBAL, this acquisition will not only help to enrich their business matrix as a leading ICL enterprise with continuous growth in its six major special inspection businesses but also enable them to quickly enter the field of major solid tumor detection such as lung cancer and gastric cancer through this acquisition, expanding their business landscape. At the same time, by utilizing their excellent clinical promotion experience and commercialization network, they will empower Guangzhou Benchmark comprehensively, forming a new performance growth point for KINDSTAR GLOBAL. It is expected to achieve overtaking in the field of solid tumor detection. In addition to the six major special inspection businesses, KINDSTAR GLOBAL has made excellent progress in special inspection reagents and immunohistochemistry library businesses. In the first half of 2024, the company's special inspection reagent products were improved and upgraded. From the perspective of NGS products, the company achieved mutation testing of major genes related to B-cell lymphoma, chronic lymphocytic leukemia, and T/NK cell lymphoma from the aspects of diagnosis, treatment, prognosis, and drug use. With this acquisition, and combined with the successful integration and further development of Benchmark Medical's technologies, KINDSTAR GLOBAL aims to strengthen its position in the early cancer detection field, creating valuable synergies and contributing to the development of the industry.The acquisition of paired benchmark medical care by KINDSTAR GLOBAL will further enhance its comprehensive capabilities in the IVD field, form a strategic synergy with the ICL business, develop a dual-track business structure, and further optimize the business model.According to the understanding, in terms of commercialization, relying on clinical influence, Benchmark products cover hospitals, physical examination centers, public health projects, and C-end, currently, Benchmark Medical has cooperated with more than 300 Class III hospitals, covering more than 50 cities, and through cooperation with large third-party testing centers to empower the field of big health and integrate channel resources for cooperation in the sinking market. For Benchmark Medical, KINDSTAR GLOBAL establishes close connections with customers through comprehensive, multidisciplinary, multi-omics, and multi-platform cooperation, and strengthens the promotion of relevant star products and new projects through cooperation with large Class III hospitals' multi-center research projects. Strategic cooperation with KINDSTAR GLOBAL will help expand Benchmark Medical's channel resources significantly, achieve a territorial expansion, and accelerate the solidification of its industry position in the field of early screening and diagnosis. Methylation testing takes another step toward "volume production" It is worth mentioning that in recent years, national policies have provided strong support for early screening and diagnosis of tumors, and methylation testing is taking another step toward "volume production". For example, Beijing, Shanghai, and other provinces and cities have included blood gene methylation testing in medical insurance, and the National Health Commission has taken the lead in implementing a national major public health special project on early diagnosis and treatment of cancer. In fact, Jiangxi, Hunan, Chongqing, Anhui, Guangxi, Guangdong, Hainan, Hebei, Liaoning, and other provinces and cities have also announced the official fee codes for genetic methylation testing, and tumor early screening clinics have been initially explored in many parts of the country, indicating that methylation testing is moving closer to "volume production". In terms of business models, hospitals, physical examination centers, public health projects, and C-end are the main four directions. From a practical perspective, companies with layouts in hospitals and physical examination centers are the most, followed by a gradual layout in public health projects, with fewer C-end layouts. In terms of business scenarios, hospitals are a mandatory option, and physical examination centers are the ideal B-end landing scenario. In addition, home testing can bring huge increments to the industry. In recent years, the sales of cancer early screening products on platforms like JD HEALTH have been impressive, and the potential for volume expansion in the C-end has begun to show. Currently, the 5-year survival rate for cancer in China has increased, but the overall incidence and mortality rates have not started to decline. According to the findings of the Shell Research Institute, there is still insufficient evidence-based medicine for early screening of most cancers, and further data validation is needed. The early screening industry for tumors, currently in its early stages of commercialization, is experiencing rapid development. But with further practice, it will inevitably lead to improvements in incidence and mortality rates, and may witness a commercial explosion after the improvements. As the technology for cancer early screening continues to mature, the tumor early screening track is expected to experience rapid growth in commercialization, and the combination of KINDSTAR GLOBAL and Benchmark Medical will synergize their respective advantages and become winners in the ecosystem forming process.