The domestic sequencing leader continues to demonstrate its global strategy. Through equity sales, technology licensing, and asset divestitures, Mgi Tech Co.,Ltd. is becoming increasingly adept at capital operations. Following its October milestone of licensing the core CoolMPS sequencing technology and related patents to Swiss biotech firm Swiss Rockets for $120 million—the first major outbound licensing deal for a Chinese scientific instrument—the story has now taken a new turn.
On February 24, Mgi Tech Co.,Ltd. announced that its wholly-owned subsidiary, MGI R&D HK, signed a Share Purchase Agreement with Swiss Rockets to sell 100% equity of its subsidiary CGI, following the divestiture of related assets and liabilities, for a transaction value of $50 million (approximately RMB 345 million).
Concurrently, MGI US LLC (Mgi Tech's U.S. subsidiary), CGI, and Swiss Rockets made significant amendments to the CoolMPS Licensing Agreement signed last September. The revisions include the addition of a paid license granting Swiss Rockets rights to the StandardMPS sequencing technology and general sequencing technologies.
In the U.S. and Canada, Swiss Rockets obtained an exclusive license for patents, technical know-how, and trademarks related to StandardMPS, along with a non-exclusive license to use general sequencing technologies within the StandardMPS field. However, MGI US LLC retains the right to use library preparation reagents for non-optical sequencers in the region.
Notably, following the sale of the CoolMPS technology to Swiss Rockets last October, Mgi Tech had stated its intention to focus resources on developing and commercializing core technologies like StandardMPS in key markets to strengthen its leading position in core products.
The swift divestiture of CGI assets raises questions: Is this a strategic move to improve financial statements and optimize capital structure, or a hasty decision leading to undervaluation?
The transaction involves a carefully structured "clean shell" worth RMB 300 million, allowing Mgi Tech to remove assets from its balance sheet while retaining associated benefits—a dual advantage.
It is important to note that CGI was not originally an asset of Mgi Tech. In 2013, the BGI Group spent $118 million to acquire North American firm Complete Genomics Inc., a move that laid the technical foundation for Mgi Tech but has since become a vulnerability amid shifting international dynamics.
The transaction announcement explicitly cites "major changes in the international business environment" and "increasing complexity in the global geopolitical landscape." Combined with Mgi Tech's inclusion on the U.S. Biosecurity Act watchlist and CGI's "Chinese-owned" status leading to operational losses in the U.S., the sale carries a tone of necessity.
Rather than remaining passive, Mgi Tech has innovatively leveraged technology licensing. While selling a company acquired for $118 million at $50 million may appear unprofitable, the company laid careful groundwork beforehand.
Prior to the Share Purchase Agreement, CGI signed a Reverse License Agreement with MGI US LLC, granting the latter permanent, free, and irrevocable rights to 205 patents, technical secrets, and trademarks. This pre-sale design offers several advantages:
1. **Ensures technological continuity**: Even after CGI’s ownership change and the transfer of StandardMPS technology, Mgi Tech retains permanent, cost-free access to core patents through MGI US LLC, maintaining its global technological foundation. 2. **Mitigates geopolitical risks**: Mgi Tech retains exclusive rights to CoolMPS technology in the Asia-Pacific and Greater China regions, along with global exclusivity for StandardMPS outside the U.S. and Canada, effectively transferring direct operational risks in North American markets to Swiss Rockets. 3. **Maintains supply chain synergy**: Mgi Tech will continue supplying necessary products based on Swiss Rockets' commercialization progress, ensuring efficient utilization of existing production capacity.
Additionally, Mgi Tech meticulously handled asset剥离, removing RMB 1.986 billion in assets—including internal receivables of RMB 1.748 billion, excess inventory of RMB 78 million, external accounts receivable of RMB 124 million, and intangible assets of RMB 36 million. These were transferred to subsidiary MGI US LLC, ensuring the transaction involved only a "clean" operational entity.
Through this series of moves, Mgi Tech immediately gains $50 million in cash flow, sheds underperforming assets, and retains its core technology base. Moreover, tiered royalty fees based on net sales will provide a long-term, stable cash return.
Behind these capital operations lies Mgi Tech's urgent drive to return to profitability. Since its listing on the STAR Market in 2022, the company has reported net losses for three consecutive years (2023–2025), with cumulative net losses attributable to shareholders reaching RMB 1.429 billion and adjusted net losses totaling RMB 1.636 billion.
In early 2026, Mgi Tech issued an earnings forecast projecting an adjusted net loss between RMB -397 million and RMB -322 million, suggesting breakeven may be within reach. Among 19 institutional forecasts, the prevailing expectation is that Mgi Tech may achieve marginal profitability or break even in 2026, with the CGI sale expected to contribute positively.
Mgi Tech is selling CGI to stem losses while pursuing acquisitions to enhance operational capabilities. What are your views on Mgi Tech’s trajectory for 2026?
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