Value Investing Long Thesis - 10x Genomics (TXG) - Towards a comprehensive view of biology

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Long Thesis - 10x Genomics (TXG) - Towards a comprehensive view of biology Posted: 22 Aug 2020 12:25 PM PDT Intro: I would like to start sharing my long thesis on biotech companies, genomics in particular, from the perspective of someone that works in the field. A little about myself - I have a B.S. in Bioengineering and M.S. in Bioinformatics and work as a Computational Biologist in academic oncology research. I do not and have not worked for 10x Genomics. I'm an amateur when it comes to security analysis and am approaching investing by capitalizing on trends I see in my own field of work and having worked directly or indirectly with the technologies in question. I hope my unique insights may be beneficial and look forward to learning from others. What do they do and why does it matter: 10x Genomics provides technology to sequence DNA in individual cells as opposed to sequencing DNA from a bulk sample. Standard practice involves collecting a tissue sample, mashing it up, and sequencing the extracted DNA as a whole. Now imagine collecting that same tissue sample, separating out each individual cell, and sequencing the DNA from each cell. This then provides the researcher a with a window into the cellular micro-environment. Essentially aiding in answering the question of what cell type is doing what and where. This kind of information in invaluable and could lead to the development of novel therapeutics and new avenues of inquiry. The initial product offered by TXG is their "Chromium System" that allows for the single cell sequencing mentioned above. The most recent product is their "Visium Technology" which, in addition to the information described above, provides spatial data on the cellular environment. This means that not only can you obtain information about what's going on in each cell, you can obtain information about WHERE it is happening. Financial case for TXG and notes from Q2 call: In an attempt to become a better financial analyst I've studied many of the investor materials on the 10x Genomics website. This includes listening to the most recent Q2 conference call, reviewing uploaded presentations, and studying SEC filings. From the financial point of view yearly revenues continue to increase and I expect the company to become profitable as early as 2021. Debt levels appear to be reasonable and decreasing. The main revenue streams are instrument sales and consumables in the form of reagents required to run the machines. Notes I considered important from Q2 call: - Continue to see strong demand for TXG products despite covid pandemic - 60% of labs using TXG technology returned to operation through the summer post covid shutdown - Potential for NIH (National Institute of Health) to increase funding for research in general due to covid which could boost demand for TXG technology - Increase in patent filings and approval Competition: Given my unique perspective "single cell sequencing" and "10x Genomics" are practically synonymous in the field and many researchers aren't even aware of competition to TXG. With that being said, Bio-Rad Laboratories (BIO) offers a competing but inferior product (I've never seen anyone actually use it personally or in a publication). Additionally, Becton Dickinson (BDX) offers similar technology which I don't hear much about. However, TXG's CEO Serge Saxonov complemented BDX's single cell sequencing technology at the UBS Genomics 2.0 and Medtech Innovations Virtual Summit. Final case: My case is built upon my perspective in the field and I see that single cell sequencing is booming which is backed up by the 1200+ peer reviewed publications since 2016 that use TXG technology. This number is increasing yearly and I see the trend accelerating especially with the new Visium technology. TXG technology is increasingly used in industry for therapeutic development as well is in academia for research. Having worked with data produced by TXG technology and having insight into how their customers view the product I see TXG continuing growth for the next several years at least. Again, I want to point out that my case relies upon being familiar with trends in research and the product. The financial analysis is amateur and secondary (would love feedback on anything I missed in the financials of the company itself). Please feel free to ask any questions or provide any feedback. submitted by /u/dps2501 [link] [comments]

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