Quantified Health Files IPO Prospectus: Pioneering Microbiome Testing Set to Transform Five Major Healthcare Sectors

This year, the U.S. government issued a statement announcing an annual investment of $400 million to implement the National Microbiome Initiative (NMI). With the support of multiple national agencies, efforts will be made over the next two years to map and study these microbial communities. Combined with $1 billion in annual private-sector investment, total annual funding for microbiome research in the United States now reaches $1.4 billion.

Influenced by the investment and research community in the United States, and with the maturation of second-generation gene sequencing technology leading to a significant reduction in costs, companies related to microbiome research in China have emerged in large numbers. Quantified Health, which was founded as early as 2014 and focuses on gut microbiome testing, has captured our attention due to its unique judgment and vision.

QuantHealth is a biotechnology service company specializing in microbial molecular diagnostics and related applications. Leveraging next-generation high-throughput sequencing systems, the company has independently developed a series of detection technologies and tools for microbiome analysis. Through these proprietary technologies and tools, QuantHealth provides microbial testing solutions to institutions and companies in the scientific research and broader health sectors.

Zhao Baiwen, founder of Quantified Health, once led a multi-million-dollar research project. He was named one of the “Top 35 Innovators Under 35” in 2013 by MIT Technology Review, one of “Asia’s 40 Business Leaders Under 40” in 2014 and 2015 by Fortune, and featured on Forbes’ “30 Under 30 Asia” list.

Zhao Baiwen, Founder of Quantified Health

At the age of 18, he joined BGI Genomics as a high school student. Despite being poised to become the fourth-generation leader of BGI, he departed from China’s leading genomics company to launch his own venture. Rather than pursuing personal genomic testing, he chose to focus on the microbiome—a field that had garnered little attention in China at the time.

In response to his departure from BGI to start a new venture, Zhao Bowen told a reporter from VCBeat (WeChat ID: vcbeat): “BGI was like my university; I spent five years there learning. Although I could have ‘stayed on’ due to my strong performance, graduation means moving on. I wanted to enter the workforce. As for why I did not choose personal genetic testing, it is similar to how many college graduates today opt for careers with greater promise. I share that perspective: I believe individual microbiome genetic testing holds more promise than personal genetic testing, which is why I pursued this path.”

“The market size for personal genetic testing was $20 billion in 2015, growing at a compound annual growth rate (CAGR) of 10%. Zhao Bowen told VCBeat (WeChat ID: vcbeat) that the microbiome testing market will become as important as the personal genetic testing market in the future, and may even be larger in scale.”

Human health is determined by two factors: genetic factors and environmental factors. The former manifests as variations in the individual genome, which can be measured using genomic technologies; the latter manifests as variations in the individual microbiome, which requires measurement via metagenomic technologies.

The individual microbiome serves as the interface between the human body and the environment. In other words, the vast majority of environmental factors exert their effects on the human body through the commensal microbiota inhabiting the internal and external surfaces (skin and mucous membranes), which comprise thousands of prokaryotic species and a small number of single-celled eukaryotes.

Metabolism, the process by which the human body exchanges energy and matter with the external environment, is continuously regulated by millions of functional genes harbored within the symbiotic microbiome. Given that the diversity of the symbiotic microbiome far exceeds that of the individual human genome, it plays a crucial role in maintaining physiological homeostasis.

Since the completion of the Human Genome Project (HGP) in 2001, intensive research on individual genomes has continued unabated over the past fifteen years. Related applications, such as targeted therapy and non-invasive prenatal diagnosis, have driven the personal genomics industry to maintain a high annual growth rate exceeding 10%.

The concept of microbial testing has emerged in recent years. uBiome, an early U.S. company in this field, was founded in late 2012 and secured $1.5 million and $4.5 million in funding in June and August 2014, respectively. Although it has not been as popular as personal genomic testing in the past few years, Zhao Baiwen believes that with the implementation of the National Microbiome Initiative (NMI), the commercial prospects of microbiome testing will definitely surpass those of personal genomic testing.

On the other hand, although research on individual microbiomes predates that on individual genomes, the lack of foundational standards has hindered industrialization over the past few decades, and the related industry has yet to reach its potential scale.

In recent years, thanks to the rapid advancements in next-generation sequencing and bioinformatics technologies, several government-supported metagenomics research initiatives (such as MetaHIT, HMP, and NMI) have made it possible to gain a deeper understanding of the human microbiome, thereby clearing potential obstacles for the future growth of the personalized microbiome industry.

Current scientific consensus holds that the individual microbiome constitutes the human body’s “second genome” and is associated with a variety of chronic systemic diseases, primarily including obesity, type 2 diabetes, liver cirrhosis, inflammatory bowel disease, mood disorders, and autoimmune conditions.

Through their connection with the human brain, gut microbiota can not only regulate human emotions but also influence our food preferences. Regarding the human immune system, researchers have found that they play a crucial role in immune development. Microbes are also closely linked to respiratory diseases, aging, and cancer. In terms of pharmacotherapy, researchers are focusing on the interactions between gut microbes and antibiotics or immunotherapies. In fact, researchers now treat gut microbiota as a therapeutic target, and it has effectively become an organ that cannot be overlooked.

Fifteen years ago, individual genomics sparked a technological boom. Now, with the maturation of second-generation gene sequencing technologies, medical science is once again reaching an inflection point for a surge in individual microbiome technologies. The individual microbiome represents the long-missing final piece of the puzzle required to construct a self-consistent and comprehensive understanding of human physiology. While foundational research has become increasingly abundant and robust, available application tools remain lackluster and fail to meet the needs of companies rapidly entering this emerging industry.

Thus, this creates ample room for quantifying health by providing a comprehensive suite of specialized application tools—including samplers, assay kits, quantitative instruments, and analysis systems—for the emerging individual microbiome industry, ultimately establishing industry standards.

The individual microbiome possesses a unique dynamic equilibrium, offering both real-time insights and predictive capabilities in medical applications. In the short term, unlike the individual genome, the individual microbiome can reflect current health status, similar to blood tests. In the long term, compared to the individual genome, the individual microbiome exhibits a stronger correlation with the future progression of diseases.

Zhao Bowen told a reporter from VCBeat (WeChat ID: vcbeat) that personal genome testing is a one-time procedure, with the focus on sequencing. A distinct characteristic is its lack of variability; an individual’s genetic makeup is determined at birth and remains unchanged unless genetic mutations occur (such as those associated with carcinogenesis). Therefore, a single test to determine the gene sequence lays the foundation for subsequent interpretation.

Microbiome testing is a time-sensitive assay that emphasizes quantification. The gut harbors a vast diversity of microorganisms with widely varying abundances. Within a microbiome, the genetic content of a few microbial species may account for up to 90%, while thousands of other microbial species collectively constitute only the remaining 10%. Some microbial genes exhibit very low abundance, with the levels of two different functional genes sometimes differing by seven orders of magnitude. Inter-individual variability further complicates microbiome testing. To obtain statistically robust and convincing data, it is necessary to analyze a large number of individuals, which substantially increases the workload.

Furthermore, the microbiome is dynamic; measurements vary under different conditions, such as before and after meals or before and after disease onset. It is precisely this variability that underscores the significance of microbiome testing, as it provides the prerequisite for human intervention.

First, in the healthcare sector, a growing body of research has demonstrated that numerous chronic conditions—including inflammatory bowel disease, colorectal cancer, type 2 diabetes, obesity, liver cirrhosis, coronary heart disease, atherosclerosis, rheumatoid arthritis, systemic lupus erythematosus, depression, and autism—are closely associated with the human microbiome.

For example, Helicobacter pylori is the most common pathogenic microorganism, causing ulcers; Lactobacillus can alleviate stress and anxiety; Methanobrevibacter smithii produces the majority of methane in the human body; Bifidobacterium can treat various intestinal diseases; Lactobacillus helveticus is associated with reduced anxiety and depression; and Bifidobacterium longum is also linked to reduced anxiety and depression.

The second domain is the in vitro diagnostics (IVD) industry, where various disease-associated molecular biomarkers designed based on the human microbiome can be used for early detection of chronic diseases, including early discovery, early prevention, and early intervention.

Zhao Bowen told VCBeat (WeChat ID: vcbeat) that weak interventions, which do not directly alter the microbiota, are already being applied and can be used to guide dietary choices. However, strong interventions, which involve targeted modifications of the microbiota, are still under research. For instance, while we have determined that an increased abundance of certain functional genes elevates the risk of depression, we are currently unable to directly intervene to reduce these genes; nevertheless, this is expected to become feasible following further research.

The third sector is the health management industry, which utilizes microbiome testing to determine health indicators. Changes in the composition of the human microbiota can reflect health characteristics at the level of the body's internal environment; the microbiota serves as a "barometer" of human health, enabling real-time monitoring of an individual's health status.

The fourth industry is the dietary supplement sector. Inter-individual variations in gut microbiota lead to differences in vitamin synthesis capabilities. When confronted with a wide array of vitamin products, blind selection may mildly impair absorption or, in severe cases, result in conditions such as kidney stones, gastric ulcers, and hepatitis.

Zhao Bowen told reporters that while there is a wide variety of health supplements available on the market, individuals often do not know which ones are suitable for them. Through microbiome testing, we can identify which microbes (and their corresponding functional genes) are lacking in our bodies, indicating a deficiency in specific beneficial substances. This allows us to make targeted purchases. For example, Bifidobacterium synthesizes vitamin B, Escherichia coli synthesizes vitamin K, and Streptococcus synthesizes vitamin C. If your body has low levels of Bifidobacterium, you should consume more nutritional supplements rich in vitamin B.

Finally, in the pharmaceutical industry, it is reported that the microbiome is poised to be incorporated into drug regulations as a safety standard for new drug development. This move will not only further enhance the safety of clinical drugs but also establish a new threshold for new drug development. The pharmaceutical industry will also invest substantial resources in assessing the potential impact of drugs on human safety through human microbiome testing.

LinEnrich™ technology and the knowledge base platform are the core competencies of Quantified Health.

LinEnrich™ technology is a proprietary genetic testing method independently developed by Quantified Health for microbiome research. It achieves, for the first time, targeted capture and quantitative sequencing of microbiome samples. Within the limits permitted by the original sample’s molecular abundance, it generates over 1 Gb of high-quality data, ensuring the integrity of gene abundance information.

Linear Enrichment™ technology targets low-abundance target sequences (relative abundance <10^-4) within samples. Under the premise of equivalent effective data, Linear Enrichment™ can significantly reduce detection costs compared to traditional metagenomic sequencing. It has broad application potential in areas such as disease association analysis, environmental microbiome testing, and pathogen detection in clinical samples.

In simpler terms, if whole-genome sequencing is used to analyze the entire microbial community in a sample, the resulting data may reach 10 GB. By contrast, with LinEnrich™ technology, we can selectively target only the microbes of interest, generating just tens of megabytes of data. This significantly reduces the analytical workload for researchers.

Given the complex nature of microbiome genes, the KnowledgeBase project is a computational platform that abstracts microbiome sequencing data and integrates it with sample metadata for analysis. The goal of the KnowledgeBase is to enable non-bioinformatics “professionals”—such as researchers, clinicians, and companies who lack the capability to abstract genetic data—to fully leverage this platform for application-level development in genomics.

Quantified Health’s workforce is primarily divided into experimental and information-oriented talent. Employees engaged in information processing are mainly programmers and data specialists, while those involved in experimental work typically have backgrounds in chemistry, chemical engineering, or molecular biology. Zhao Bowen told reporters that although interdisciplinary talent is generally needed, specialization remains key; by recruiting experts from various fields along with coordinators, they can achieve better outcomes. This hiring philosophy has also accelerated the pace of their research.

Foundational large-scale studies of the microbiome have been largely completed. Future research needs in the microbiome field will primarily stem from how to achieve targeted translational applications. Therefore, demands for microbiome testing will increasingly emphasize targeted and quantitative analysis, as well as convenience and automation in bioinformatics analysis.

Quantified Health is a technology service provider catering to business-to-business (B2B) clients. It offers testing and analytical services to commercial entities such as health management companies, physical examination centers, dietary supplement manufacturers, and hospitals. These institutions gather user feedback and product recommendations, which they then submit to Quantified Health. Throughout this service process, Quantified Health shares profits with these commercial partners. Currently, its testing portfolio includes assays for polysaccharide metabolism, lipid metabolism, beneficial substance synthesis, and resistance gene detection.

In the scientific research market, Quantified Health offers customized services tailored to partners’ specific needs, providing modular options such as sampling, testing, and analysis, as well as comprehensive end-to-end solutions. Currently, Quantified Health is in discussions with research institutions including Amway China’s R&D Center, the Medical School of Shenzhen University, and West China Hospital of Stomatology regarding the specifics and frameworks of collaboration.

The gene sequencing industry chain primarily consists of three segments: upstream equipment and consumables supply, mid-to-downstream sequencing services, and bioinformatics data analysis. Discussing the future development of Quantified Health, Zhao Bowen told a reporter from VCBeat (WeChat ID: vcbeat) that the company would continue to provide technical services to downstream gene sequencing companies this year. In 2017, it will complete the development of its own microbiome testing kit, at which point users will no longer need to send samples to the company for testing. In 2018, Quantified Health will launch its own microbiome testing instrument, marking its strategic move from the mid-stream toward the upstream segment of the industry chain.

The National Microbiome Initiative has three major goals: first, to support interdisciplinary research to address fundamental questions about microbiomes in diverse ecosystems, such as what constitutes a healthy microbiome; second, to develop tools for detecting and analyzing microbiomes, such as handheld sensors capable of real-time detection of microbes in air, soil, water, or the human body; and third, to train more professionals in the field of microbiome science.

Quantified health planning overlaps with these three goals. It remains unclear whether quantified health initiatives will collaborate with U.S. research institutions, which would undoubtedly accelerate R&D progress and reduce costs.

According to Zhao Baiwen, Quantified Health will attend the 6th International Human Microbiome Conference (IHMC 2016), held in Houston, USA, in November 2016, and will officially release its Linear Enrichment™ technology and knowledge base platform at the conference.

Quantified Health completed a RMB 20 million Pre-A financing round on October 9, 2015, led by the Dingxing Fund managed by General Technology Venture Capital Co., Ltd. The company is currently undertaking its Series A financing, with the primary purpose of funding further research and development of its Linear Enrichment™ technology and knowledge base platform, establishing medical laboratories and new offices, as well as talent acquisition and team building.