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Technology

The businesses behind the doctor who manipulated baby DNA

He Jiankui's Direct Genomics built on failure of adviser's US company

HONG KONG -- The stunning claim this week by scientist He Jiankui that he had edited the genes of twin Chinese babies recently born in Shenzhen has drawn significant attention to his business ventures.

According to Chinese company information service Qichacha, He has roles at four companies in Guangdong Province and one in Beijing, and is an investor in eight companies. His most prominent venture is Shenzhen-based Direct Genomics Biotechnology, which makes devices to sequence single molecules of DNA. As chairman, he holds a one-third stake in the company.

Direct Genomics' technology is built on that of Helicos BioSciences, an American company co-founded by Stephen Quake, a Stanford University bioengineering professor. He worked on DNA sequencing techniques in Quake's lab in 2011 just as Helicos neared collapse.

He returned to China and founded Direct Genomics in July 2012, four months before Helicos entered bankruptcy protection. The new company then licensed key patents from the California Institute of Technology, where Quake previously taught.

He's plans for Direct Genomics were met with skepticism. According to an interview he gave to state-owned China Daily in 2016, he was rejected by 30 venture capital funds within six months.

"Due to [Quake's] influence, I thought it was important to commercialize [his] scientific achievements and that prompted me to set up my own company," He said. "[But] the company nearly went bankrupt."

The city government of Shenzhen, which had just launched a program to recruit tech talent and researchers and opened the Southern University of Science and Technology, came to He's aid.

He was set up with a teaching position at the school and received 1 million yuan ($144,000) in angel funding, according to an interview he later gave to Beijing Review, another state publication. All told, city subsidies for the company reached 40 million yuan, according to an article last year in the Shenzhen Daily.

"Shenzhen's generosity in encouraging startups, especially venture capitalists ... is the main [thing] that attracted me," he said. "The university offered great support for my startup business. I am not a professor in the traditional sense. I prefer to be a research-type entrepreneur."

Technology advances enabled Direct Genomics to design smaller, cheaper sequencing devices than the ones Helicos had struggled to sell. The company's target has been to deliver a device that can perform clinical DNA sequencing tests for $100. (While the company's website identifies Quake as a scientific adviser, a spokeswoman for him said he has never been involved with Direct Genomics.)

Direct Genomics has received four or five additional rounds of funding since its first injection of support. According to its website, it received capital in 2014 from Shenzhen copper company Amer International Group and Tus-Holdings, an investment group attached to Tsinghua University. Beijing-based Tengye Ventures also put in funds.

In its most recent fundraising in April, Direct Genomics took in 218 million yuan from Shenzhen's Cosun Venture Capital and other investors reportedly including SinoTech Genomics and Beijing Xiyi Asset Management.

More established technology funds have remained wary of He and his ambitions, however.

Qiming Venture Partners, an early backer of companies including Xiaomi and Meituan Dianping, decided not to invest in Direct Genomics after an evaluation.

Instead, Qiming invested in genetic sequencing rival Berry Genomics, which has since listed on the Shenzhen Stock Exchange. More recently, Qiming led a $17 million fundraising round for CureGenetics, a Suzhou-based company that is using gene editing to develop medicines.

Qiming managing partner Nisa Leung worries that He's gene-editing bombshell will trigger a regulatory crackdown that could extend to gene therapy and other areas. This, she said, would be problematic for the whole Chinese biotech sector. Indeed, shares of Berry and its peers tumbled Tuesday on growing expectations of official intervention.

Nikkei staff writer Nikki Sun contributed to this report.

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