MGI licenses core CoolMPS sequencing technology to Swiss Rockets in deal worth over $120M

On October 12, MGI Tech Co., Ltd. ("MGI", 688114.SH), a leading Chinese gene sequencing company, announced that its wholly-owned subsidiaries, MGI US LLC ("MGI LLC") and Complete Genomics, Inc. ("CGI"), have entered into a Licensing Agreement with European biotech company Swiss Rockets AG ("Swiss Rockets"). Under this agreement, MGI will grant a paid license for its core sequencing technology, CoolMPS (a non-damaging base sequencing technology), along with related patents and proprietary know-how, to Swiss Rockets. The total transaction value is no less than US$120 million.

This collaboration marks the first case in China's scientific instrumentation sector where a core underlying technology patent portfolio has been licensed to an overseas company for global commercialization.

According to the announcement released by MGI, the two parties have signed a Licensing Agreement. This business development (BD) collaboration adopts the classic three-tier payment structure of "upfront payment + milestone payments + sales royalty". Swiss Rockets will pay a US$20 million one-time upfront payment, followed by US$20 million in milestone payments, and tiered royalties based on a certain percentage of the net sales of the licensed products.

Under the agreement, besides obtaining exclusive rights for the R&D, production, registration, and commercialization of the technology globally (excluding the Asia-Pacific and Greater China regions), Swiss Rockets also secures the right to grant sub-licenses, meaning it can continue to partner with other entities. Furthermore, Swiss Rockets holds the right of first refusal for any next-generation technologies developed by MGI in the future.

The CoolMPS sequencing technology is one of MGI's high-throughput sequencing platforms. Its core principle involves employing non-labeled reversible terminators for the polymerization reaction and achieving base calling through specific antibody recognition. Compared to traditional direct fluorescent labeling of nucleotides, this antibody-based approach offers significant advantages as it eliminates the need for chemical modification of the bases. The newly synthesized strand retains nucleotides in their natural state, thereby avoiding interference with subsequent polymerization efficiency and fluorescent signals caused by "scars" resulting from the cleavage of fluorescent labels, which facilitates highly efficient and stable continuous DNA polymerization. Furthermore, since a single antibody can be conjugated with multiple fluorescent molecules, the detection signal is substantially amplified. This enables DNA nanoballs (DNBs) with the same copy number to yield stronger fluorescence signals and a higher signal-to-noise ratio, thereby effectively enhancing sequencing data accuracy and read length.

According to the announcement, Swiss Rockets is an innovative conglomerate based in Basel, Switzerland. Founded in 2018, it brings together several leading biotechnology companies specializing in niche sectors, with subsidiaries in Switzerland, Serbia, and the United States. Its key R&D focus areas are oncology and infectious diseases.

MGI stated that this licensing agreement is expected to generate substantial cash flow and deliver long-term, stable revenue for the company, while also mitigating compliance and registration risks in its global expansion efforts.

MGI further emphasized in the announcement that it retains all rights to the technology in the Asia-Pacific and Greater China markets. This allows the company to concentrate resources on the R&D and industrialization of core technologies—such as StandardMPS—and key markets. This focus is conducive to consolidating the leading position of its core products and aligns with the company's overall strategic development direction.